Lambert Talks With Tim Wu, Net Neutrality Pioneer and NY Lieutenant Governor Candidate

Yves here. Lambert interviewed Tim Wu, who is campaigning with Zephry Teachout to upset politics as usual in New York. Both are running in the New York State primary against Andrew Cuomo and his candidate for lieutenant governor, Kathy Hochul.

The Teachout/Wu campaign against Cuomo has gone from quixotic to the most interesting state race this fall. Cuomo’s poll ratings have suffered as a result of being targeted by Federal prosecutors for interfering with and then quickly shutting down the Moreland commission, an anticorruption initiative he had launched. Cuomo poured gas on the fire by apparently trying to influence members of the former commission, leading to a scathing public rebuke by the US attorney for the Southern District of New York, Preet Bharara, over possible witness tampering.

Wu has an aura-of-burning-rubber resume. He’s best known as a Columbia law professor who coined the expression “net neutrality” and was instrumental in the passage of 2010 Net Neutrality legislation. His areas of expertise include antitrust, telecommunications, and copyright law.

Wu is pegged as having better odds of prevailing in the primary than Teachout, and Lambert discusses how he might use his bully pulpit if he wins. Lambert confessed that he came out of the talk not just impressed but also hopeful.

We are grateful for the assistance of Lisa Cigliana, who transcribed this interview.

LAMBERT STRETHER: So, on the campaign. Cuomo’s operation is challenging your campaign’s ballot access and Teachout’s residency. You’ve turned to crowdsourcing to raise legal fees. How is that going, and is the bulk of your campaign’s funding crowdsourced?

TIM WU: Right. That’s a great question. We have started crowdsourcing. Some campaigns have had success with it. And we have so far have managed to raise $30,000 using crowdsourcing, which is paying for a good percentage, but not all, of our fees related to the lawsuit. I think we are experimenting. A lot of candidates are experimenting with what crowdsourcing does to run a campaign. It is not possible yet to do, at least for us, to do everything through crowdsourcing.

The thing with crowdsourcing is, you raise money for a very particularized project. When you think about Kickstarter, people want to see something concrete, like we want to defend this lawsuit, or we want to make this ad, or drive people from here to there. On Kickstarter, it would be something like, we want to make a better eggbeater. So people on those fundraising platforms are very keen to do individual things, but campaigns still need what you might call general money. And I think that at some level, the in-person meeting is impossible to beat for that, or phone calls.

So, crowdsourcing hasn’t completely displaced general money, but it is incredibly useful for individual projects. Particularly one like where it just felt that we were facing such an imbalance, because of course Cuomo has unlimited legal resources and he was trying to bully us off the ballot.

LAMBERT: And he has I think 100 times your budget. But perhaps your dollars are worth more, dollar per dollar, than his. So I guess we will find out.

WU: Well, it is a war of attrition. I think one of the problems with politics today, is that politics doesn’t necessarily need to be expensive. I mean, really, it is just about getting ideas out there and talking about things. In fact, it could potentially be cheap. But it is things like spending hundreds of thousands of dollars on lawyers to defend ballot access, which makes it artificially expensive. And the price of advertising. Prices of advertising. But if you could reach voters without having to pay for ads on broadcast, the whole campaign system would be a lot cheaper.

LAMBERT: Yes. On the campaign, will you serve out your term if you win your race and have to serve alongside Andrew Cuomo, as happened with Alfred DelBello and Mario Cuomo? And do you really believe the LieutenantGovernor can check-and-balance the governor? How does that work?

WU: Sure. So, the answer is, yes, I do plan to serve out the term should I win, no matter who wins, Zephyr or Andrew Cuomo. I anticipate my job might be slightly more challenging under Andrew Cuomo, but as I interpret the Constitution of the State of New York I have my independent office, I have my own budget, I have my own salary, and I do not believe that I, as president of the Senate, necessarily have to follow the Governor’s orders. So I admit there could be some rocky times, but, on the other hand, I strongly believe…. As I have said, I have a White Paper on this topic, “The Independent Lieutenant Governor.” ‘

And the basic point of it is, the Lieutenant Governor is often a wasted ceremonial position. And it could be a lot more. It could be someone who serves as a policy entrepreneur. Someone who takes alternative views on things and really tries to advocate for the public’s interest. And directs attention to issues that don’t get any attention. A good example right now is Comcast. In New York, Comcast has proposed to buy the Time-Warner cable system, which I think is a terrible thing for New Yorkers. But it is not getting a lot of attention. But as Lieutenant Governor, and even as a candidate, I am trying to direct attention and say “You know, do we really want this to happen?” And urging the relevant agencies, the Public Service Commission, to block the merger. So that is the kind of thing I can do. Can I be a total check-and-balance to the Governor? No. The Governor of New York is an incredibly powerful position. I also would not necessarily see myself, as you might say, as the opposition.

LAMBERT: Constitutionally, the position would support your vision, is what you are telling me.

WU: That’s right.

LAMBERT: On the campaign: You said, quote, I have two bases: “the Internet” and the Chinese-American community. Do you think the Internet really shares values and interests to an extent that it would be an electoral and political force? And how would we tell?

WU: Well, the Internet itself….

LAMBERT: No, I mean…

WU: No, I know that, I know that, I am just playing with the question. I believe the Internet itself will rise up from the routers, and become this potent force that sweeps victory in my direction. I guess what I mean by “the Interent”, as you’ve already guessed, is the dedicated Internet users, high-tech people who also take an interest in politics. You know, I don’t think they all share values and interests, but they do tend to share a real taste for challengers, start-ups, non-establishment figures, and that is kind of what I am trying to tap into. The Internet has always been kind of the outsider’s place. It has always been a force for outsiders, amateurs…

LAMBERT: Whether on the right or on the left…

WU: On the left, on the right. So I would not imagine Tea Party people are going to come out and support me, but I think that there are people who are very progressive but somewhat fed up with the Democratic Party in various ways who would support me. And so those are the kind of people who I think of as the Internet. I think of the Internet as the place people go when they feel they have been excluded. And those people are often I think going to be behind my campaign.

LAMBERT: I am going to shift over to state issues. On fracking, do you support a statewide ban, local bans as in Dryden, or a drilling regulatory panel of industry representatives, as in the horrible events in Colorado, or some other regulatory regimen?

WU: That’s a simple answer. I am in support of statewide bans. Zephyr and I are. We think that people… States are rushing into fracking quickly. I am concerned with upstate New York, which is such a beautiful country, would just go to fracking, hope it would be the salvation to the economic problems, and look back 15 years later and say, “Boy, that was a huge error.”

So, I think New York can afford to wait. You know, this is the State of New York. I don’t think we have to chase down every fad that promises to save the economy. So I support a ban. I think maybe in 5 years we will know whether in fact the environment is being destroyed and whether communities are destroyed by fracking. If it turns out, as some people say, that miraculously there are no negative effects, that will be great. But, there are so many times that communities make this rush into something they think is going to be the silver bullet and save the economy, and they end up destroying their environment, looting their natural resources. I mean, just think of the lumber industry, everything chopped down, and then where do things go. So, resource extraction.

I have a fundamental belief that resource extraction is not a good way for a sustainable economy to develop. I think it can bring some short-term wealth, but I don’t think for a state like New York which has traditionally had so much success in so many varied industries, whether it is technology, manufacturing, whatever you have, that we need to rush to fracking, as if we are a developing country. So that’s how I feel about it.

LAMBERT: Yes, in Maine, we’ve moved on from extracting wood to landfills and water, and it’s like real “Shock Doctrine”-style tactics have been employed. It is quite amazing.

On corruption, the Department of Justice has proposed a $16 billion settlement with J.P. Morgan over mortgage-backed securities, a process in which Gov. Cuomo’s Attorney General Eric Schneiderman participated. What pattern of conduct would you need to see to recommend criminal prosecution of J.P Morgan executives, as opposed to a cost-of-doing-business fine?

WU: Yes, that’s a great question. It is not only a pattern of conduct, it is also an issue of mental state. I guess it comes down to, in other words, what did they know, and what was the intent, which I think is… Frankly, I think the old common law, and also statutory crime of fraud, is the one that people should be thinking about in these areas. That’s the bar for me. Fraud is intentional deception of people with material information. And I think we need to ask, in issues like Morgan-backed securities, in fact was there intentional misrepresentation that caused people to lose millions of dollars, or even hundreds of thousands of dollars. So that’s what I think should be the test.

Andrew Cuomo, when he was Attorney General, he really dropped the ball on this. It was him, not Schneiderman, who was there right in the middle of the crisis. Under his rule, if I am not mistaken, there were absolutely no criminal investigations, no grand juries, it was sort of just off limits. Now, he was perfectly happy to get some money for the state, but off limits any idea of criminal responsibility.

Now let me say why I think criminal responsibility, or the threat of it, is so important. There is a thinking in the banking industry, it goes, the slogan for it is, “I’ll be gone, you’ll be gone.” Which is to say, no matter what problems we create here, well, we’ll be out of here. We’ll be retired. We’ll just take our couple hundred million dollars, move on to something else, leave J.P. Morgan behind. And this is a serious problem, because no one has any incentive to stop things if they are not personally affected by them. You know, if you left Lehman Brothers, or J.P. Morgan, and you are already somewhere else, making a decent salary, you made your hundred million dollars, why would you care if Lehman Brothers is forking over money. It’s just like, oh well, suckers. And then that is tough for the next set of people.

So it is really important to have individual responsibility. Fraud is the appropriate crime. And let me say one more thing about this before I go on. We tend to think, well, the most important thing would be criminal indictment of executives. And I don’t deny that symbolically, that is very important. But I also think it was an astonishing failure to prosecute just even at low level, regular, old-fashioned mortgage fraud. That there was a lot done at very low levels, when things were fast and loose, that were simply fraudulent or violations of the way people are supposed to sell mortgages. You know, some of the subprime mortgage packages. And, none of that has been prosecuted either, at all. The lower level stuff, also. You know, sometimes this stuff kind of bubbles up. If you have a culture of illegality at every level, it bubbles up. So that’s what it comes down to for me.

LAMBERT: I wonder if you are familiar with the work of William Black, “Accounting Control Fraud” and his notion of a criminogenic environment?

WU: I am not, although it sounds like I should be. But I do teach Criminal Law. I teach Criminal Law, and I have actually been in what I consider to be vaguely criminal environments when I worked in the corporate environmennt.

Lambnert: On monopoly power: What will you do at the state level to ethelize commercial relationships between Amazon, a large monopoly, and the creative classes, especially smaller publishers and writers?

WU: Yes, this is a really challenging question, which I feel like I am very close to, because I am myself an author.

LAMBERT: Go ahead.

WU: I don’t… I am upset with what Amazon is doing right now. So there are some. .. there is a line… So first of all, I think we need to understand that authors and creators are a special class in the American society. You know, this is not just a bargain between a seller of peanuts and a seller of peanut butter, or something like that. There is more at stake. If relations break down between peanut and peanut-butter sellers, well, we don’t have peanut butter. But, without books, this country is not what it is meant to be. We are a republic of letters and ideas. And I think it is important to remember that. That said, it is a good question how government intervenes in commercial relationships in a careful way. I don’t necessarily think the state should go in and dictate terms. But I also think it should be very aware of when Amazon has accumulated monopoly power and is beginning to violate the antitrust laws, particularly as it begins to favor itself. And also be very aware if Amazon is misleading consumers, or making it seem like the publishers are at fault here.

So it is a tricky issue, I don’t actually have a magic bullet answer. Part of my heart would say, OK, step in and dictate terms. But I think there is some danger to that on a long-term basis. But I think we should do what we can under consumer protection and the antitrust laws to make sure Amazon doesn’t violate the law in its negotiations as a quasi-monopoly in online sales.

LAMBERT: Does the state of New York have any power in addition to whatever we might do at the federal level?

WU: It has the same power as at the federal level, and it has different interests. Yes. The state has its own anti…

LAMBERT: Its own antitrust laws, and its own…

WU: Its own consumer protection. It often has less resources, but… I can talk about this at length. I think that the state antitrust should direct their resources to things that are of particular New York concern, like the fate of New York authors and creators. This is an issue that deserves the attention of the state antitrust.

LAMBERT:Ok. I am going to segue to the New York economy. Why has non-tourist economic redevelopment in the former industrial areas of upstate New York been so ineffective? And how would you deliver results instead of more decades of “planning”? Specifically, Rochester used to be a tech center, and you are a tech candidate! So how would you get Rochester going again?

WU: Well, I want to go back and talk about what New York State was, and what it can become. So, New York State was, as you well know, once one of the wealthiest, particularly upstate New York, one of the wealthier areas in America. It was an unrivaled tech center, not only in America, but in the world, if you consider the companies that were there, or started there. IBM, obviously, General Electric, Xerox, Kodak, Corning, I mean, these were the leading companies, and they generated an incredible wealth for that region. And along with all the industries, but I am just talking about tech, which I know best. I mean, I am a tech historian, and this is the history of Upstate New York. A little bit of New Jersey with Bell Labs, you know, a little bit of Boston, and so forth. But upstate New York just has a huge role.

And I am of the view that it can rise again. What once was, can be. And I look back to the way we looked at New York City in the 70s. People looked at New York City and said, you know, this place is doomed. It is never going to be what it once was, and we might as well just leave before the buildings fall down. And it took a lot of people who really believed in New York, and it took decades, and the city got back on its feet. So that’s at a very general level.

So why have we not been able to do the same in upstate New York? I would suggest, first of all, that there is no one answer for fixing post-industrial challenges. And sometimes our idea that there is one answer has been part of the problem, like, oh, we need fracking. Or, like, casinos are going to solve our problem. Trying to become like Atlantic City just doesn’t strike me as the answer. Sometimes, you know, “our bass pro is going to move in and then we’ll solve all our problems.”

So one problem, we need to get away from the approaches that I would say, well, they are not corrupt, but they are definitely premised on choosing favorites. By this I mean, the various tax credit or subsidy programs the state has tried out. You know, I can understand, they seem very well-meaning, but I think…when you look at something like Startup New York, which is this program, the typical approach is they will choose one company out of say six and say “OK, you don’t pay taxes for whatever next period of time.” Which is great for that company, but not necessarily so great for all of its competitors. And it is very good for creating political loyalty, but I am not sure it is really effective in the long term.

How come we have this idea that, if only we could get the guy who left to come back, or another huge employer to come back, well, that will solve all our problems. I think what we did was we let upstate New York become too dependent on single industries. All the towns had one big company that it relied on, or two big companies. And we have to generate economies that are much more resilient and depend on a broader ecosystem.

So, how do you do this? Well, you know, like I said, it is hard. There are a few things that I think, and all of them come from, I guess what I’d call principles of economic gardening, or building sustainable economic ecosystems. One is, I think you need to build public higher education and strengthen the universities and their specialties to the point where people think, “That’s where I want to move, you know, I am going to go to college and I am going to stay here, because I love the area, and I just think it offers a lot of opportunities, and I’ve had a great education.” You know, if you look at the wealthy spots around the country that aren’t cities, they are always centered around great universities. Ann Arbor, the universities near Duke, obviously around Stanford. I think upstate New York can do that, too. Now, you have to start somewhere. It is not like tomorrow you are going to become like Stanford and its spinoff industries. But that is the place to go. And there are great educational institutions that should be strengthened instead of weakened.

Second of all, I think you can try some regulatory variance in those areas. Particularly, now I am talking about tech. We should seek out things like ways to vary from the usual spectrum rules, so you could have experimental test beds where people could try out different solutions. Say, you know, New York is open to trying to develop itself as a place where people try out different spectrum solutions.

LAMBERT: I’m sorry, what do you mean by a spectrum solution?

WU: So, a spectrum hotbed. It is called a spectrum test hotbed. I guess I am getting too technical.

LAMBERT: No, that’s fine. Go for it.

WU: OK, well, let me go for it. The normal spectrum regulation laws, as you know, ban most uses of spectrum unless it is approved by the FCC. There are a lot of potential uses which people have not been able to test or use because testing or using them is often a felony.

So I think we could seek waivers from the federal government for certain cities and say, here the usual spectrum rules do not apply, you know, maybe Rochester, outside of Rochester. And so people could try developing things like smart radios, or ultra-wide band radio technologies. See, the key thing is that it is the regulatory environment that is driving it, because the normal rules don’t apply.

So you could invent stuff that would be illegal to use in the rest of the United States. And then, once you have figured out the technology, then we can figure out how to deploy it in the rest of the United States and the rest of the world. And so I think there are real opportunities to use regulatory variances in upstate New York for things like development.

Basically, again, I do not believe in magic bullets. This is just one of many tech ideas. I think we need a strong broadband infrastructure upstate, so that people and businesses there can have fast broadband access. Ultimately, I think it will come back. I think Rochester is starting to come back. And I think ultimately a place that was once such a center for high-tech people still has an incredible number of smart, inventive people living there. Ultimately, if we invest in our own, tech will come back. I will say one last thing about it. I am encouraged and I think that…

LAMBERT: I’m just going to let you roll on this last one.

WU: Let me roll on this last…. New York City tech is doing great. Everyone used to laugh at New York City tech. It is now doing great. So many significant tech companies in the world and in America right now are coming out of New York City. And I have to believe that, as rents get more expensive, as they need more space, as they need different kinds of facilities, we need to make it clear that upstate New York State would be a great place to expand. A good example is IAC. It is not quite upstate, but it has opened its offices in Yonkers.

LAMBERT: I’m sorry, IAC?

WU: So, there is a tech company called IAC, which runs a whole bunch of tech things, from Expedia, Match.com, Vimeo. They have a whole collection of some of the top internet sites. It is probably one of, let’s say, the three top leading internet companies in New York City. They are starting to move upstate. Now, Yonkers is not that far upstate, but it is out of New York City. As I see it, I think the New York City tech scene is going to need, the same way San Francisco and Silicon Valley work together, I think the New York City tech scene is going to start seeing some of the advantages of upstate or mid-upstate when it needs more room, cheaper rents, different kind of employees, and so forth. So, I think it is really interesting to try and understand how… what has been so successful in New York City can be spread to upstate New York.

LAMBERT: It’s not like Brooklyn is the only place you can get craft beer.

WU: That’s true. Upstate New York has terrific brews.

LAMBERT: Do you have anything you want to say to close this out?

WU: Maybe I will just say this last thing. I think that I am a perpetual optimist. I am fascinated and obsessed with economic development questions. I just see it as an ongoing question, particularly on New York upstate economic development. I can’t find anything more interesting. The last thing I will say is that, if I am elected Lieutenant Governor, I will spend enormous amounts of time trying to figure out how to fix Penn Station, because it drives me crazy. It is an infrastructure embarrassment.

LAMBERT: It was an act of civic vandalism to do what they did to Penn Station. I’m glad to hear that you would try to rectify that.

WU: It is an architectural crime against humanity. One of the reasons that I am motivated to get into state government is just to undo all that grievous wrong. That’s all I’ve got for today. Thank for having me.