What's the Difference Between Invention and Innovation?

The history of technology is replete with stories of companies that had a great idea but didnt know quite what to do with it.

Xerox PARC, the celebrated Silicon Valley-based R&D center is the most famous of these. Its staff and the creative genius they unleashed are legendary in the tech community, both for the brilliance of their inventions - and for the fact that others often benefited far more than did the parent company that paid for it.

There have been other fonts of innovation over the last century including RCA and Bell Labs. But the increasing prominence of Apple's SIRI has drawn attention to a once secretive company whose primary function is to win government contracts in order to help the US military realize its technological dreams.

SRI International, the company that spawned the idea that became SIRI has a distinguished provenance. SRI originally stood for Stanford Research Institute and was the university's research arm. It was eventually spun off in order to provide greater opportunity to become profitable and it has achieved that goal.

SIRI is emblematic of the company's focus on innovation rather than 'mere' invention. The notion is not so much to be the cleverest (though that doesnt hurt)or to come up with cool new stuff, but to be sure that whatever is being created is intended for a market that enables both SRI and its clients to secure a financial return while solving a problem that may enhance other commercial opportunities.

This focus on practical applicability has assured a steady stream of new business while financing ever more audacious experiments that lead to even newer and potentially profitable new fields. It is quite an innovative business model. JL

Dan Friedell reports in Fast Company:

SRI International, the brains behind Apple's Siri, has launched a dozen consumer products since its digital assistant got famous. We venture inside SRI's labs to find out why you haven't you heard of any of them.

Tilt: High Frequency Traders Are Buying Data Ahead of You. Legally.

It is conceivable that some day in the future historians will look back on this era and shake their heads in wonder at the blatantly anti-competitive behavior permitted in the name of efficiency or capitalism or whatever misleading euphemism suffices.

But they wont dare do so now as many of their positions are funded by contributions from the financial services industry.

When even the Wall Street Journal finds it impossible not to comment on the notion that market-moving information is being sold for competitive advantage by the companies that produce it and some of the market makers that regulate and manage it, one begins to sense the size of the current standard deviation from what used to be considered fair play.

Why this is considered reasonable, let alone permissable, remains something of a mystery. Raw financial power explains some of it. The palliative impact of 'market smoothing' allegedly engendered by such sales is another potential benefit often touted in defense of the practice.

But whatever the excuse, the declining participation by retail investors in the equity markets suggests that while the short-term results may be profitable to a few, the long term impact on the market may be less positive for companies looking to raise capital and the nations hoping to see their economies prosper from those investments.JL

Geoffrey Rogow reports in the Wall Street Journal:

Fitch Ratings became the latest provider of market-moving news to streamline a path to high-frequency traders.

You Are What You Retweet: Twitter Presents New Targeting Method for Advertisers

You are the key to you. And to others you know.

This is the essence of the new targeting capability Twitter is providing advertisers. Whether by interest or device or a host of other factors, advertisers, whether commercial or political, can target the audience most likely to be susceptible to their message.

The targeting is based on the preferences of the individual user and those in his or her network. Those preferences may also permit the advertiser to know whether Android, iPhone or Blackberry users are more or less likely to vote or buy what's being sold.

No consent is required - yet. Privacy advocates are, once again, raising concerns about the implications for misuse or abuse of the data. But consumers have steadfastly ignored all previous entreaties in this regard. Given the choice between a discounted latte and protecting personal information, that'll be half-caff soy milk, thanks.

Twitter is rather late to this party. Google, Facebook and others have already taken the leap, with mixed results. But it is clear that the trade of information for service is considered a fair one by consumers, so far. And that both the targeting and the sale of that information will only escalate. JL

Steve Friess reports in Politico:

Twitter is finally joining its competitors in making money off of what it knows about its users.

The booming microblog quietly rolled out to advertisers earlier this month a new targeting method, one that helps campaigns and companies reach people based on what users they follow and what they retweet

Google and Dynamic Pricing: Patenting Your Propensity to Overpay

This 'dont be evil' thing turns out to be, well, pretty open to interpretation.

Lots of people overpay. Or feel that they do. Buyer's remorse is a common emotion. But it turns out that the propensity to overpay can be identified, managed and even predicted. To the point where Google has patented a means of doing so.

In our current socio-economic state, living by the Golden Rule about doing unto others or being your brother's keeper are about as popular as submitting to the dentist's drill without novocaine. We dont appear to have a lot of sympathy for anyone else. Could be due to our straitened economic circumstances. Or maybe a couple of generations of prosperity have just coarsened us. Whatever the reason, taking advantage of others appears to be considered a fair part of the bargain between buyer and seller.

This is particularly interesting in the internet context: Nigerian investment scams, Chinese IPOs and American political promises all vie for the consumers' attention. But actually patenting ways in which people can be targeted to overpay seems a mite predatory, even by today's morally flexible standards.

The advantage the net has had over tangible, retail commerce is its transparency, convenience and generally lower costs. They are mutually supportive and deeply interwoven. As soon as it is perceived that one of them has been undermined, the others may soon follow. JL

Timothy reports at SlashDot:

A newly-granted Google patent on Dynamic Pricing of Electronic Content describes how information gleaned from your search history and social networking activity can be used against you by providing tell-tale clues for your propensity to pay jacked-up prices to 'reconsume' electronic content, such as 'watching a video recording, reading an electronic book, playing a game, or listening to an audio recording.'

FBI's Nationwide Biometric Facial Recognition System Ends Anonymity As We Knew It

Not that we are convinced anyone will really care until they or a close relative runs afoul of the system, but the FBI is deploying a bleeding-edge facial recognition software tracking capability across the US.

According to reports, once the FBI has your faceprint, they can match against their data base and begin tracking. And just in case you are thinking that cosmetic surgery is the answer, the next stages involve DNA analysis and voice identification.

For those who think, oh, it's the government they'll never get it right, there will be cost overruns and the whole thing will be scrapped: newsflash; it is on budget and already 60% deployed.

Privacy advocates are, of course, alarmed. But then they have been in a constant state of alarm for years. And that is not a put-down. It is just a reflection of the relative lack of concern the average citizen has demonstrated for the actual or potential loss of privacy they have experienced. The reason is probably that it is not always apparent this tracking is happening, there is no obvious loss of freedom of movement or action - and it is not costing them anything explicitly.

The announcement is unlikely to spark massive protests from a population more concerned about putting food on the table than whether someone is watching them. Especially as so many invite that attention every day via social networks, YouTube, Twitter, et al. You dont know what you've lost till it's gone, indeed. JL

Michael Kelley reports in Business Insider:

The FBI has begun installing state-of-the-art facial recognition technology across the country as part of an update to the national fingerprint database,

Color War: Christian Louboutin Wins Appeal to Trademark Red Soled Shoes

Whew! Just in time for fashion week.

The eyes of the intellectual property community have been focused myopically on the seemingly endless Google-Samsung-Apple patent battles. Because that's where the big legal fees are, we hear you cynically intone.

But an equally interesting fight has been waged in the US Federal courts for the past year between two French design houses, Christian Louboutin and YSL (Yves St. Laurent). Louboutin claimed that he 'owned' the use of the color red on the soles of women's shoes. YSL disagreed.

To many mere mortals, the notion that anyone can own the use of a color seems a bit extreme. What's next, suing everyone with a green lawn who didnt pay for permission? But the court, in its wisdom, ruled that Louboutin has the right to use that color on shoe soles provided, Solomonically, that the uppers are a color other than red. Sounds a bit, well, persnickety to you?

Philistine! YSL won the right to use red soles as long as the uppers are red because it pioneered that particular 'look and feel.'

Which leads us to the larger point: that companies like Louboutin - and Apple - are fighting for greater restrictions on the use of intellectual property - patents, copyrights and trademarks - that fairly belong in the public domain. The whole point of intellectual property law is to protect the work of creative people and entrepreneurs who deserve the right to benefit from the work they have done in designing and building innovative products and services.

There are many who fear, however, that the increasingly restrictive applications of this concept will reduce the incentive to innovate while driving up prices.

We may well celebrate M. Louboutin's design sensibility and taste. But it is unlikely that many of us can afford his shoes. And the concern is that a growing string of such decisions may put large portions of the human spirit off limits. JL

Basil Katz reports in Reuters:

The bright red soles on French footwear designer Christian Louboutin's high-heeled shoes are so distinctive they deserve trademark protection, a U.S. appeals court has ruled.

So Who Inherits Your iTunes and eBook Libraries?

Here's the good news: one less thing for the relatives to fight over after you're gone.

Because the answer appears to be that you cannot bequeath your iTunes list to anyone. Per se. You can, of course, give your iPod or iPhone or laptop to someone and, assuming you pass along all the relevant passwords they can copy your list. But actually determining what rights, if any, you may have for any of your accumulated electronic wealth is a legal gray area shrouded in black.

The issue comes down to rights. Which, if you bother to read the boiler plate legalese Apple and others make you agree to with a dot occasionally before downloading, you do not have. Or own. In fact, the rights are 'nontransferable.' And you agreed. Same with eBooks.

Many states have passed laws granting access to digital accounts, a crucial right given the degree to which the computer has replaced the file cabinet as the source of knowledge and wealth. But the same rights do not usually extend to electronic files you may have purchased.

Enjoy them while you have them. And remember that it's not really going to be your problem anyway. JL

Quentin Fottrell reports in MarketWatch:

Many of us will accumulate vast libraries of digital books and music over the course of our lifetimes. But when we die, our collections of words and music may expire with us.

Man Bites Dog: Chinese Businesses Filing IP Lawsuits

Well, what do you know?

A company starts creating intellectual property and before you know it, someone starts ripping it off, so they decide to protect it. What a concept.

The Chinese, recently (in)famous for most gratuitously disregarding other people's patents, trademarks and copyrights, have found religion when it comes to intellectual property. And as so many conversions on the proverbial road to Damascus (or Dalian) are wont to have done, this one was inspired by self-interest. Namely, that as the Chinese increasingly believe they can compete on the global stage, they understand that protecting whatever value they are creating is essential to realizing future returns.

The world's largest country has long intended to evolve from a 'brawn' nation to a 'brain' nation. It was the messy details of how they were going to get there that remained unclear. But as Apple, Google, IBM, Facebook and a host of other tech companies - many co-founded by Chinese ex-patriots - have demonstrated, intangible ideas may matter more than tangible manufacturing plants.

And Chinese companies understood all too well the urgency of that protection regimen, because the most fearsome violators of their IP were their own countrymen. Having grown up fast in a tough neighborhood, Chinese companies are now working the system to protect the value they are creating. To do so, they are being pro-active in two ways; defending what they have actually created, and artfully using the IP laws to challenge others' IP rights in China and elsewhere to try to gain competitive advantage. Or, at the very least, a settlement that gives them access to something that might be useful.

No foreign business hoping to enter the Chinese market can expect to do so without trading some of their knowledge for the privilege of access. But the larger lesson is that as in so many other corners of the economic sphere, the Chinese have learned how to extract value by learning from the example of others. JL

Jia Lynn Yang reports in the Washington Post:

U.S. companies have long accused the Chinese of stealing their intellectual property. But now some in China are pointing the finger back.

Microlenders Discover Opportunity and Profit in Online Business

Times are tough. Banks are skeptical. Friends and relatives are worried.

What's a start-up or small-scale entrepreneur to do?

Financiers who admired the business model - and returns - generated by microlenders in developing nations have taken that concept to the bleeding edge. Following in the footsteps of crowd-sourcing investments, microlenders are identifying small online businesses that can generate the performance necessary to pay off what often appear to be usurious loan rates.

What appeared to be an act of generosity at the teeny cost levels such loans generated in India or South America, suddenly look pretty hefty in Seattle or Austin. But both the lenders and borrowers point out that with banks trying to protect their asset levels due to new restrictions on leverage, they have to take money where they can get it. And are often grateful to be able to do so.

There have always been loan sharks and asset or inventory-based lending businesses that helped companies get over the hump of a payroll to meet or a new line to create. They tended to be concentrated in certain industries (fashion was famous for this before it went corporate)and geographical locations. Lender and borrower knew each other - or knew someone in common - and they knew where each other lived.

What is different now is that the personal trust and community ties that undergirded these systems are absent. The internet has spawned a new kind of trust, but one based more on traditional due diligence and a reliance, if necessary, on the rule of law. It is too early to say if this will become a trend, but for those without wealthy relatives or a network of well-heeled friends, it is, at least, an alternative. JL

William D'Urso reports in the Seattle Times:

Erik Jimenez needed $1,000 right away to buy 200 used guitars he could sell from his online store.

He couldn't get a conventional loan or line of credit from a bank because his business of selling vintage and custom music instruments was too small. But the Bellflower, Calif., resident knew how to use social media to generate sales

No More Naked Body Scans? TSA Seeks New Airport Sensors

DARPA invented the internet so it should be able to figure out whether you're hiding a gun in your underpants.

At least that's the theory.

The US Transportation Security Administration (TSA) those folks who scan your luggage and you at airports has a secret. And the secret is that those scanners you wait in line for and that some people thought gave the security folks a chance to see you naked are not always capable of providing the prurient thrills so many were worried or titillated about.

The problem is that the current generation of supposedly infallible scanners tend to make some booboos. They are prone to either over or under-reporting the presence of dangerous substances - aside from those...well, you get the idea.

So TSA has contracted with DARPA - the legendary Defense Advanced Research Projects Agency, the Pentagon's supersmart, supersecret unit charged with developing cutting edge, unspeakably cool stuff. This assignment is perfect for DARPA: figure out a way to effectively, quickly and accurately screen millions of resentful people every day, many of whom are trying to smuggle Cuban cigars, fake silk scarves, cocktails nuts of dubious provenance and even the occasional explosive device.

And do this in what may be the one corner of the economy where people actually express concerns about privacy. On the internet, they'll give their entire life story, complete with passwords, to perfect strangers they cant even see. At the airport, they dont even like taking off their shoes to avoid exposing their socks (and maybe being blown up).

Whatever. It sounds like we will soon have a new technology to complain about. But maybe it will have Wifi. JL

Lorenzo Francheschi-Bicchierai reports in Wired:

Two years ago, the Department of Homeland Security stepped up its campaign to install controversial body scanners at airports nationwide. At the time, the agency claimed the machines could spot all sorts of hidden weapons and contraband.

Today, more than 700 of the imagers are in place at 180 airports. But the so-called “naked” scanners may not be quite as all-seeing as they were originally billed to be.

Insurers Facing Largest Loss: Not from Hurricane, but From Summer Drought

As one part of the country prepares to lose millions getting soaked by a hurricane, another is losing billions from a drought.

The 2012 summer drought is so bad that insurers face the largest agricultural losses in US history. Because agriculture has become a big, nay huge, business, farmers, like executives in other industries hedge potential risks by taking out insurance. And they have every intention of collecting.

The good news, if it can be called that, is that the government will pick up much of that tab. The reason is that it offers crop reinsurance programs and farm issues tend to dominate the economies of a number of states. In an election year, there will be no quibbling about the cost, even from self-styled deficit hawks.

Four years after the worst financial crisis in 80 years, the nation now faces the worst agricultural crisis in the same period. Images of the Joad family and other desperate 'Okies' from John Steinbeck's acclaimed 1939 novel,'The Grapes of Wrath,' may come to mind, but farmers today are executives, futures traders, environmental experts, supply chain managers and sophisticated financiers. The insurance companies, having weathered the financial crisis thanks to government bailouts, now face another challenge as the drought wipes out their farm state business partners.

The only upside may be that now that the financial services industry is once again threatened, the primary cause - climate change - may actually receive more respect from those whose finances are most at risk. It takes a village, indeed. JL

Javier Blas and Alistair Gray report in the Financial Times:

The insurance industry faces its biggest ever loss in agriculture as the worst drought to hit the US in more than half a century devastates the country's multibillion-dollar corn and soybean crops, triggering large claims.

Jury Finds for Apple vs Samsung in Mobile Patent Lawsuit; The Implications

It isnt the $1 billion awarded in damages.

Yeah, that's a lot of scratch, but not really for either Apple or Samsung. It may put a dent in someone's bonus if Samsung ever actually has to fork it over, but even that is not certain.

And it isnt necessarily that Apple won. That is significant in that it forces everyone else to stop copying now. It will probably impact the market - for a while.

But the big news may be in two disparate albeit connected areas: design and innovation.

There is no doubt that the jury verdict is good for Apple. They protect their franchise and it gives them some breathing room to continue building on their financial lead in the post-Steve Jobs era.

That the nexus of the decision is focused on design is very significant. The look and feel of the iPhone (Samsung actually saw its tablet design protected in this case)is one of its salient features. The key patents have to do with how it appears and operates. This means that design - and the patents that protect it - are now operationally and financially important. Perhaps in some cases even dominant features in the business environment. Take that, all you deriders of so-called 'soft' assets.

What's also clear is that it may not be so good for the rest of humanity in the short term. One argument says that innovation may be stifled as companies start flinging patent suits at any competitor who looks sidewise at their products. Patent trolls, financial carpetbaggers whose business is to buy patents and then sue anyone who produces anything vaguely similar in hopes of cashing in on the resultant suit or settlement, will be emboldened. There may be a period of uncertainty as everyone attempts to ascertain how to proceed without an armada of legal battleships protecting them.

But there may be an element of 'be careful what you wish for' for Apple in this decision. Android phones from the Google-Samsung alliance have been outselling iPhones by over 3 to 1. The issue is availability and Apple's expensive pricing. The market is making it clear that the greatest future growth may be in lower end products with similar, if not identical, features. And the verdict's impetus to spur creativity in design rather than slavish devotion to the Apple template may produce some serious competition.

This is all speculative. Right now, Apple rules the roost. But the co-evolutionary nature of technological development suggests that this was one battle in a very long war whose end is not yet in sight. JL

Joel Rosenberg and Ian King report in Bloomberg:

Apple Inc. scored a clear victory in its patent dispute with Samsung Electronics Co. yesterday, increasing pressure on smartphone makers around the world to create handsets that stand apart from the iPhone and deliver more choices for consumers in a $219.1 billion market.

A jury awarded $1.05 billion in damages yesterday after finding that Samsung infringed six patents for mobile devices, a defeat for Apple’s biggest opponent in smartphones.

Modem Medicine: Take Two Apps and Call Me in the Morning

First, do no harm.

To make informed judgments you need good information. To get it, particularly in the health field, better data is required as the rise in costs - and the stagnation in health performance - has become the center of a national debate about economic and social priorities.

This has led to the burgeoning business of bioinformatics: identifying, collecting and monitoring data to help medical professionals improve their diagnoses and prescriptions. Not surprisingly, the rise of mobile technology has provided new, relatively inexpensive tools to assist with these tasks.

The latest step is not just downloading an app, but having an app prescribed by one's doctor for a specific purpose. Prescriptions are already part of the culture - and virtually everyone has a phone. The question is whether quality will keep pace with the demand for new applications.

There will, almost certainly, be miscues and technology failures. Information security issues will almost certainly abound. The resultant emergencies will be sensationalized and become front page news. But the concept is rational and practical. We are a mobile civilization. We have already surrendered what little privacy we have to obtain discounts and enhance convenience. Further assuring access to health care electronically is a natural and relatively minor step in that context. The questions will come later as the efficacy of the treatments and the cost efficiency associated with them become better known. As a society we have already placed ourselves firmly on this path. Health simply extends the route. JL

Joshua Brustein reports in the New York Times:

Before long, your doctor may be telling you to download two apps and call her in the morning.

Smartphone apps already fill the roles of television remotes, bike speedometers and flashlights. Soon they may also act as medical devices, helping patients monitor their heart rate or manage their diabetes, and be paid for by insurance

Computer Viruses in Cars' Electronic Systems Are a Nightmare Experts Are Working to Prevent

Your computer crashing is bad enough. But at least it is unlikely that anyone will die as result.

Your car crashing due to a virus in the electronic and computer systems that now govern how most autos function? Yes, nightmare. And lots of people are thinking about it - both good and bad.

An estimated 30 to 40% of a car's value is now derived from on-board electronics. That means there are a lot of systems to hack. And in terms of potential impact, an average late model sedan weighs approximately 3,000 pounds. An SUV can be double that. That's a lot of steel, aluminum and plastic hurtling into harm's way if the wrong signals are sent.

The auto companies - and various governments - are taking the threat seriously. So far, they claim to be 'unaware' of any attempted hacks on vehicle systems. But once again, our societal preference for convenience, connectedness and convergence may be overwhelming our ability to anticipate and counteract potential threats. We want to be able to do everything everywhere. That is the essence of mobility. But the public policy implication is increased vulnerability. That is a trade-off we seem prepared as a society to accept. Just as shootings in workplaces and movie theaters have not stopped people from either working or movie-going, so turning cars into literal vehicles of mass destruction seems unlikely to stop us from driving - or demanding more and better electronics. But foreshadowing the possibility - and insisting on safeguards may reduce the likelihood of its occurring. JL

Jim Finkle reports in Reuters:

A team of top hackers working for Intel Corp's security division toil away in a West Coast garage searching for electronic bugs that could make automobiles vulnerable to lethal computer viruses.

Intel's McAfee unit, which is best known for software that fights PC viruses, is one of a handful of firms that are looking to protect the dozens of tiny computers and electronic communications systems that are built into every modern car.

And the Point Is? Google- Motorola Patent Lawsuit Seeks US Import Ban of All Apple Devices

It's getting to be the end of summer and in many US states, the school year is beginning.

Which is entirely appropriate as the various patent battles under way resemble nothing so much as preschooler sand-box tussles.

The latest iteration is that Motorola, now owned by Google, filed paperwork for a suit that, if successful, would ban the import of all Apple devices into the US. And the likelihood of that happening is: approximately nil. In all fairness, there are those who argue it is exactly nil.

It is nice to see patents and other forms of intellectual capital receiving their due. It has been a long time coming. But from a strategic standpoint, this all appears to be a sideshow. The way to dominate the competition and establish an unassailable business is by designing and building great products, surrounded by superior services. Who-thought-of-what first in the maelstrom of technological innovation is, in most of these cases,(ahem)patently absurd.

One of the great advantages of Silicon Valley, Route 128, Bangalore, Tribeca, the Haidian district of Beijing and a host of other regional innovation hotbeds is the torrid exchange of ideas and people. Once the idea has gelled, the ability to execute and get your product to market is the differentiator.

The concern these patent battles raises is that corporations are focused more on protecting their turf than on creativity and innovation. As US Judge Richard Posner signaled in his opinion earlier this summer, these suits are a waste of the court's time - and the economy's time. None of these companies is going to put each other out of business on the strength of a patent lawsuit. But they may well put themselves out of business by losing focus on what really matters. JL

Matt Marshall reports in Venture Beat:

Motorola, the phone company Google acquired this year, filed a patent infringement suit against Apple that effectively to ban the import of the iPhone, the iPad and the iPad Touch to the U.S.

The paperwork was filed by Motorola with the International Trade Commission on Friday, but won’t be available for public viewing online until tomorrow (Monday).

Where Has the Small Investor Gone?

They get it. They get that the system is managed to optimize returns for the brokers and big institutions. They get that the regulators think protecting the financial services industry is their top priority. They get that politicians are dependent on finance contributions. They get that high frequency trading and other financial 'innovations' are designed to benefit those that created them.

They are not protesting in the streets, because they also get that they have little hope of changing the system that way.

So, they may not be the brightest or best informed or most connected or wealthiest. But they understand when what little they have is being frittered away. And they are just smart and energetic enough to seek alternatives. So the changes that will inevitably come from the loss of trust in the capital markets will be driven by the decline of funds flows into those self-same markets.

Isn't that how capitalism is supposed to work? JL

Barry Ritholtz comments in The Big Picture:

Lots of folks are wondering what happened to the Main Street-mom-and-pop retail investors. They seem to have taken their ball and gone home. I don’t blame them for feeling put upon, but it might be instructive to figure out why. Perhaps it could even help us determine what this means for risk capital.

We see evidence of this all over the place: The incredibly light volume of stock trading; the abysmal television ratings of CNBC; the closing of investing magazines such as Smart Money, whose final print issue is on newsstands as it transitions to a digital format; the dearth of stock chatter at cocktail parties. Why, it is almost as if America has fallen out of love with equities.

Religion, Reputation and the Rule of Law: The Implications of Russia's 'Pussy Riot' Trial

By traditional Russian standards, the outcome was lenient: the defendants, a three-woman political rock band collective known as Pussy Riot who had performed without permission in an Orthodox cathedral, were not beaten, shot or sent to Siberia - yet.

But to those who dwell in the civilized world, even those parts where repression is common, the event had all the staged markings of a Stalinist show trial. The guilty verdict was preordained and only the severity of the sentence was in question. Two years in prison was the outcome. There will be legal appeals (fat chance) and even Kremlin supporters are suggesting (with more hope than knowledge, one surmises)that President Putin will urge/decree a shorter term.

The larger issue lies is the global context. Times of change are disorienting and frightening. In Russia, the US, China, Europe - and almost everywhere else on the planet, the verities of the post WWII era are crumbling in the face of faster and freer communications. Try as they might, authorities simply can not keep up with the power of the technologies driving this trend. Ethnicity, gender, race - and religion have all been affected by the tumultuous stirrings.

Religious leaders feel especially vulnerable - and empowered. Islam and evangelical Christianity have both seized on the uncertainty of their believers to demand political changes consistent with their ambitions. The Russian Orthodox church, having been suppressed for most of the 20th century has enjoyed its new-found position as a favored ally of the political class. The Kremlin has used it to legitimize its continued grip on power in the face of Communism's fall. And the Church has reciprocated.

So the protests against President Putin in 2011 were something of a shock to the system. Who would dare do such a thing under the Tsars or the Communist hegemons? The Pussy Riot protest event in 2012, held purposely in a cathedral, was a direct challenge to the political role of the country's historic religion - and a new attack on the alliance. As such, the Kremlin evidently believed the protesters had to be made an example of.

But in so doing they erred. Because they elevated what was otherwise an obscure act of political theater that would hardly have earned a press mention in most western societies into a global cause celebre. And they have raised questions about the proper places and uses of religion both in Russia and in the world at large.

When embraced voluntarily, religion's role is secure. But when used as an agent of repression - either overtly as in the Pussy Riot case - or less obviously as in attempts to thwart freedom of speech and other civil liberties in the US - negative reactions eventually outweigh the potential short term power gained.

Research has demonstrated that economic success is strongly correlated with the rule of law. In a competitive global society, Russia and other countries must compete for investment. As in any competition, when those considering the odds believe them to be uneven, they will take their chances elsewhere. JL

Miriam Elder reports in The Guardian:

A storm of criticism broke in Russia following the harsh two-year prison sentences given to three members of the feminist punk band Pussy Riot for protesting against the government in a Moscow cathedral. Those openly critical of the jail terms included some who are close to Vladimir Putin and others with strong links to the church, increasing pressure on the authorities to treat the trio more leniently.

Citigroup and 25 Other US Companies Paid Their CEOs More Than They Paid In 2011Taxes

Plausible deniability.

It used to work so well. For any negative corporate behavior there was usually a reasonable explanation that cast just enough doubt on the claims of its detractors that legal liability could be avoided.

But it just doesnt much matter anymore. And the reason is the decline in business reputation globally.

In response to the following story, a number of the 26 companies mentioned avoided the charge by stating that they 'paid the amount of taxes owed.' That does not, of course, refute the charge that CEO pay was greater than taxes paid. Nor does it address the unasked question as to why a company - particularly one like Citi whom taxpayers rescued - would think from an ethical and reputational perspective that it is okay to take an aggressive stance on taxes.

The 'everyone else is doing it' defense has lost a lot of its luster. Quibbles about methodology will get you only so far. In today's internet-dominated world you are guilty until you can demonstrate conclusively that you are completely innocent. Which is pretty much impossible for most businesses.

Logic would appear to dictate a review of priorities and policies. Maybe the CEOs deserve their pay. In the same way that maybe the government deserves its taxes. JL

Reuters reports:

Citigroup, Abbott Laboratories, and AT&T are among the 26 companies that paid more to their CEOs in 2011 than they did in U.S. federal taxes, according to a study released on Thursday.

Tax breaks on research and development, past losses, and foreign-held earnings were among those lightening the tax load for many companies on the list, said the Institute for Policy Studies

Authenticity: The Market versus The Law

Art is where this story begins. But it is starting point for a bigger debate about expertise - and trust.

As in so many aspects of society today, people and institutions turn to the courts and the legal system to resolve disputes that might once have been decided by reasoned discussion.

Perhaps the financial stakes have become too high. Or perhaps we have lost patience with the seemingly interminable wrangling of the litigation process. Or maybe we just no longer trust anyone else sufficiently to render fair judgment. Not that public opinion polls about the judicial system are all that edifying.

But the issue has to do with values more than value. There was a time not so long ago when a person's or institution's reputation was like gold. An asset to be protected and cherished. It was the bedrock upon which commercial transactions between those who might never meet and whose correspondence was based on the often uncertain pillars of time and faith relied. Global commerce was dependent on trust. What courts there were could not be reliably render verdicts fairly, if at all.

Today's challenge is different. Communications are instantaneous - and sometimes, thanks to the algorithmic power available - anticipatory. But rather than cementing bonds of trust, this appears to have hastened the decline in 'sense and sensibility.' Once, a reputation besmirched meant a business destroyed. Today, we inhabit a world of endless rebranding and redemption.

We rely on judges and juries, whose knowledge - let alone wisdom - is no better than our own because we have come to see experts and expertise as suspicious. Anyone with resources can buy a favorable opinion. The weight of all that education and verbiage cancels each other out.

So whether it is the value of a painting, a house or a business, we defer to others. Perhaps not trusting our own beliefs as much as the verdict itself. JL

Patricia Cohen reports in the New York Times:

Federal District Court Judge Paul G. Gardephe’s résumé includes many impressive accomplishments but not an art history degree. Nonetheless he has been asked to answer a question on which even pre-eminent art experts cannot agree: Are three reputed masterworks of Modernism genuine or fake.

Judge Gardephe’s situation is not unique. Although there are no statistics on whether such cases are increasing, lawyers agree that as art prices rise, so does the temptation to turn to the courts to settle disputes over authenticity.

Where Free Speech Goes to Die: The Workplace

Say what you will...and it could cost you your job.

Most Americans believe that their right to free speech is unfettered. And, by and large, it is. You can make truly hateful, hurtful statements; advocate radical and even bizarre theories; express how you really feel about almost anything and anyone. All without legal consequences.

The only downside is that employers are not required to continue your employment if they disagree with or disapprove of what you say. And they have the right to terminate your job if they want to do so.

This knowledge frequently comes as a shock, especially when the person affected has just been informed that his or her services are no longer required. Without wandering too deeply into the thickets of constitutional law, the basic theory is that speech is protected, but unless contractually protected, the right to employment is not. This will be particularly interesting in a Presidential election year in which much of the business establishment has lined up in support of one candidate over the other. The degree to which employees may feel that their right to say what they want, however valuable, is simply not worth losing a job in a lousy economy.

The broader question is whether companies suffer from such intolerance. Not so much for political speech, but because outspoken staff members often have good ideas about productivity, cost saving and sales opportunities. Be that as it may, the reality is that many, if not most, employees are retained 'at will,' which means the boss has the right to hire and fire without legal consequences. The market may ultimately dispose of those who are consistently immune to good advice or the loss of talented, if in-artfully vocal staff. But in the interim, free speech, like so many other 'free' assets, may actually have a price. JL

Michael Dolgow reports in Bloomberg BusinessWeek:

In America you can say pretty much whatever you want, wherever you want to say it. Unless, that is, you’re at work. Simply put, there is no First Amendment right to “free speech” in the workplace