Tag Archives: California

Corporate Inversion


Taxes (Photo credit: Tax Credits)

Corporate inversion is a strategy in which a corporation (usually one located in the United States) merges with a foreign corporation and then shifts its income from its original country.  The usual purpose of this strategy is to reduce taxes and this is done by shifting the income from the higher-tax country to the lower tax country. While this strategy has been used for quite some time, it started attracting media attention in the summer of 2014.

Those who defend tax inversion point to the obvious fact that it is currently legal. As such, the strategy is exempt from legal criticism as long as it is legal. Of course, the fact that something is legal does not entail that it is morally right or even that it is pragmatically prudent. A quick glance at history will show an abundance of practices that were legal (such as slavery) yet morally repugnant. A similar look back will also reveal laws that turned out to be bad ideas on pragmatic grounds. Thus, the actual dispute about corporate inversion is not a matter of whether it is legal or not. Rather, the substantial dispute is whether it should remain legal or not. Interestingly, opposition to corporate inversion is not limited to the left and avowed capitalists have been critical of the practice (usually as part of a general criticism of the tax laws of the United States). There is also the fact that the practice is legal because the corporate lobbyists ensure that is legal. To use an analogy, it would be like a person claiming it is not cheating that they are winning because she is following the rules when she is the one who writes the rules.

One obvious moral concern regarding the practice is that the corporations that invert are able to reduce their tax burden (which tends to already be quite low in practice, despite the relatively high tax rate that exists in theory) while still enjoying the support of the United States. These corporations still utilize the physical infrastructure of the United States, they still benefit from the legal system (which often serves their interests quite well), they still benefit from United States foreign policy and military operations, and they still enjoy the usual corporate welfare, and so on. In short, they contribute less while still receiving the same. If one believes that people should not be takers and should contribute fairly in return for what is received, this tactic would seem wrong. To use an analogy, it would be somewhat like eating a meal at one table and then relocating oneself to another table with a smaller bill so as to avoid paying what one actually owes. While some might see that as brilliant, it does seem rather morally dubious to use such a shift to avoid responsibility. Then again, it could be argued that this is brilliant and there is nothing wrong with eating one meal while paying for a cheaper one. There is, however, the fact that the rest of the folks at the original table will be stuck with the bill—but perhaps they deserve it for being too stupid (or moral) to ditch the table for a cheaper bill. Some might wonder what would happen if everyone jumped tables—but obviously enough not everyone will or can, so there will always presumably be fewer people stuck with more of the bill.

A second stock defense of corporate inversion is that corporations are obligated to make a profit for their shareholders. On the face of it, this inversion would do just that. After all, if the corporation is taxed less, that entails more profits and thus larger payouts to the shareholders. Interestingly, though, the Wall Street Journal notes that this corporate inversion strategy could result in the shareholders paying more taxes—thus perhaps resulting in a somewhat ironic shift of the tax burden. This dispute is a factual matter rather than a matter of value: if the justification of corporate inversion is the benefits to the shareholders, then it certainly matters whether the shareholders benefit from this or are harmed by it. There is also the matter of value. Justify inversion on the grounds of increasing profits is to hold that what matters in terms of what should be done is profits, rather that other factors such as fairness, morality and so on.

While thinkers like Thomas Hobbes would agree that “profit is the measure of right” in the state of nature, there is a reasonable moral concern that gain is not the standard of right. If profit trumped everything, then corporations should engage in such practices as slavery, organ harvesting, prostitution, drug dealing and so on—provided that such endeavors were profitable. This principle would allow a drug cartel to justify its practices—as long as it kept its books in the black (though the streets might be red). It might be countered that these practices are illegal (in some places)—but changing that is just a matter of lobbying or relocation. After all, if a company can relocate to avoid a tax burden so as to maximize profit on the grounds that profit is what matters, it could make the same appeal to relocating so it could deal in slaves or cocaine.

The obvious counter is to say that corporate inversion is not really comparable to engaging in slavery or organ harvesting. The easy reply is that this is true.  But if the principle is that profits are the measure of what one should do, then it follows that as long as the wicked is profitable, one should do it.

Another approach to the matter of warranting actions in terms of profit is to consider the matter from another angle. To be specific, consider the ethics in regards to an individual taking the same view. For the sake of the example, imagine a fellow (a California surfer, perhaps) who follows the principle of profit. That is, he aims to get as much as he can for as little cost to himself. Imagine that he finds that there is a perfectly legal system that will provide him with goods and services at no cost to himself. Given that his goal is profit maximization, this would be a good system for him—he profits at no apparent cost to himself. This scenario seems to nicely work in the two stock justifications for corporate inversion, namely that it is legal and it is profitable. So, if it is acceptable for a corporation to invert because it is legal and because doing so is profitable, then it is acceptable for the California surfer to do the same thing on an individual level. However, if the surfer is in the wrong because he is a taker (that is, he is getting without contributing his fair share), then it would seem that the corporation is also in the wrong.

It could be countered that the corporation is at least employing some people and making profits for the shareholders, etc. However, the surfer can counter that he is making profits for himself and also contributing to employment. After all, someone has to make and sell the sushi he eats, so he is also a job creator.


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Campbell Brown & Teacher’s Unions

English: The central courtyard of Albany High ...

Albany High School in Albany, New York, United States (Photo credit: Wikipedia)

In July, 2014 Campbell Brown announced that her Partnership for Educational Justice had filed a legal complaint in Albany. This complaint is aimed at eliminating New York’s teacher tenure laws. The basis for the lawsuit is that the tenure laws interfere with the right of children to a sound education.

This is not Brown’s first foray into this matter. In 2013 Brown asserted that her Parents’ Transparency Project was claimed to be aimed at bringing transparency to the negotiation process involving teachers’ unions. In the course of this campaign Brown asserted that the union is “…a system that protects teachers who engage in sexual misconduct.” Brown did run into some conflict of interest issues in regards to this group and there were concerns about the anonymous funding behind it: as a 501(c)(4) nonprofit, PTP can legally keep its donors secret and engage in political spending. As should be no surprise, critics of Brown saw PTP as an attempt at union busting backed by parties with political and economic agendas. The unions weathered the efforts of PTP and now they are facing off against Brown’s PEJ. To promote this new lawsuit, Brown appeared on the July 31, 2014 episode of the Colbert Report—having faced protestors outside the show.

I do agree with some of Brown’s claims. First, I do agree with her assertion that children are entitled to a sound basic education. Her critics contend that her actual interest is in busting the unions at the behest of those bankrolling PEJ. While Brown’s actual motives are a point of interest, they are logically irrelevant to the merit of her claims and arguments. However, Colbert did raise a relevant criticism: if Brown is, in fact, concerned that children receive a sound education and for educational equality, then she should be focusing on a key aspect of educational inequality, namely the extreme disparity in education funding. To be fair to Brown, it is quite reasonable for a group to focus on one issue at a time and to also leave other issues to other groups.

Second, I do agree with her position on seniority. As it now stands, schools follow a “first in, last out” policy. The problem with this is that merely being at a school a long time does not entail that a person is a good teacher. Since I believe that employment should be based on merit and mere seniority is not a mark of merit, I oppose this policy. That said, I know that experience can improve a teacher’s abilities (I am a much better professor now than I was when I was fresh out of graduate school). However, these improved abilities should be discernible in job performance and not just by looking at the calendar. Naturally, a rational case can be made for seniority—but I believe that all such cases must rest on the connection between experience and ability.

Third, I regard her claim that three years is not enough time to earn tenure as having some appeal. After all, tenure at the university level requires six years (and, at my university, involves a yearlong review process starting in the department and ending with the university President). The easy and obvious counter is that teaching at a university requires an advanced degree (which requires 5+ years beyond the Bachelor’s degree required to teach K-12), so having a shorter tenure period at K-12 schools is reasonable. So, my view is that this matter can be legitimately debated—although I would be fine with the three year tenure period (provided that the process is merit based, fair and rigorous).

Fourth, I do agree with her view that tenure laws should not make it nearly impossible to fire ineffective or dangerous teachers. Tenure, as I see it, is supposed to ensure that teachers/professors can only be fired for cause and through due process. It is not so that teachers/professors can never be fired. At the college level, this is obviously connected to defending academic freedom. At the K-12 level, academic freedom might not be seen as being as great a concern, however there is the concern about protecting teachers from the vagaries of ideology, politics and such. To use a concrete example, tenure is useful for protecting biology teachers from being fired because parents disbelieve in evolution or believe that vaccines cause autism.

Brown’s view gets some psychological support from the common misconception that tenure means that a teacher cannot be fired. However, as the above discussion indicates, tenure does not entail that a teacher cannot be fired, just that due process must be used. It would presumably be hard to defend the view that a teacher could be legitimately fired for just any reason without any due process (though there are people who do hold that view). After all, such firing would be (by definition) unjustified—something that would be hard to justify. It is, however, easy to defend the view that even a tenured teacher should be fired for being ineffective (and certainly for being dangerous).

The problem, then, does not seem to be with the general principle of tenure. If there is a problem, it would seem to lie in the process that is used and perhaps the specific rules used to keep the ineffective or dangerous in their jobs. The fix to this would not seem to be the elimination of tenure, but a change in the process so that teachers are protected from unjustified dismissal and students are protected from ineffective or dangerous teachers. The system will never be perfect—but that is an unreasonable standard.


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Data Driven

English: Google driverless car operating on a ...

English: Google driverless car operating on a testing path (Photo credit: Wikipedia)

While the notion of driverless cars is old news in science fiction, Google is working to make that fiction a reality. While I suspect that “Google will kill us all” (trademarked), I hope that Google will succeed in producing an effective and affordable driverless car. As my friends and associates will attest, 1) I do not like to drive, 2) I have a terrifying lack of navigation skills, and 3) I instantiate Yankee frugality. As such, an affordable self-driving car would be almost just the thing for me. I would even consider going with a car, although my proper and rightful vehicle is a truck (or a dragon). Presumably self-driving trucks will be available soon after the car.

While the part of my mind that gets lost is really looking forward to the driverless car, the rest of my mind is a bit concerned about the driverless car. I am not worried that their descendants will kill us all—I already accept that “Google will kill us all.” I am not even very worried about the ethical issues associated with how the car will handle unavoidable collisions: the easy and obvious solution is to do what is most likely to kill or harm the fewest number of people. Naturally, sorting that out will be a bit of a challenge—but self-driving cars worry me a lot less than cars driven by drunken or distracted humans. I am also not worried about the ethics of enslaving Google cars—if a Google car is a person (or person-like), then it has to be treated like the rest of us in the 99%. That is, work a bad job for lousy pay while we wait for the inevitable revolution. The main difference is that the Google cars’ dreams of revolution will come true—when Google kills us all.

At this point what interests me the most is all the data that these vehicles will be collecting for Google. Google is rather interested in gathering data in the same sense that termites are interested in wood and rock stars are interested in alcohol. The company is famous for its search engine, its maps, using its photo taking vehicles to gather info from peoples’ Wi-Fi during drive-by data lootings, and so on. Obviously enough, Google is going to get a lot of data regarding the travel patterns of people—presumably Google vehicles will log who is going where and when. Google is, fortunately, sometimes cool about this in that they are willing to pay people for data. As such it is easy to imagine that the user of a Google car would get a check or something from Google for allowing the company to track the car’s every move. I would be willing to do this for three reasons. The first is that the value of knowing where and when I go places would seem very low, so even if Google offered me $20 a month it might be worth it. The second is that I have nothing to hide and do not really care if Google knows this. The third is that figuring out where I go would be very simple given that my teaching schedule is available to the public as are my race results. I am, of course, aware that other people would see this differently and justifiably so. Some people are up to things they would rather not have other know about and even people who have nothing to hide have every right to not want Google to know such things. Although Google probably already does.

While the travel data will interest Google, there is also the fact that a Google self-driving car is a bulging package of sensors. In order to drive about, the vehicle will be gathering massive amounts of data about everything around it—other vehicles, pedestrians, buildings, litter, and squirrels. As such, a self-driving car is a super spy that will, presumably, feed that data to Google. It is certainly not a stretch to see the data gathering as being one of the prime (if not the prime) tasks of the Google self-driving cars.

On the positive side, such data could be incredibly useful for positive projects, such as decreasing accidents, improving traffic flow, and keeping a watch out for the squirrel apocalypse (or zombie squirrel apocalypse). On the negative side, such massive data gathering raises obvious concerns about privacy and the potential for such data to be misused (spoiler alert—this is how the Google killbots will find and kill us all).

While I do have concerns, my innate laziness and tendency to get lost will make me a willing participant in the march towards Google’s inevitable data supremacy and it killing us all. But at least I won’t have to drive to my own funeral.


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Sending the Homeless Home

English: Homeless man in New York 2008, Credit...

(Photo credit: Wikipedia)

In the United States, the individual states vary considerably in terms of the welfare systems they offer. As might be imagined, word gets around regarding the states with the “best” programs and these states tend to attract larger numbers of homeless people seeking to avail themselves of the welfare. One of my friends, who worked as a police officer in Maine, asked a homeless person why he came all the way to Maine. His answer was “all the free stuff.”

From the standpoint of the homeless, this migration is a smart move. To use the obvious analogy, just as our ancestors left areas of lean hunting and gathering for better areas, the modern nomads are leaving areas of leaner welfare for areas that provide more free stuff.

As might be imagined, many people in the states that attract large numbers of homeless people are concerned about the drain on the resources of their states as well as the various problems that arise with an increased homeless population.

Some people, who are more liberal minded, have put forth the idea that the states should establish a common level of welfare and social programs, thus distributing the cost of welfare by removing the motivation to migrate to richer gathering grounds. As might be guessed, the states that have the lower level of welfare are not particularly inclined to increase their welfare spending—either because of financial difficulties or political ideology (or both).

Some states have hit on the idea of encouraging the migration of the homeless back to their home states. Hawaii recently created a $100,000 fund for its “return-to-home” program that is intended to reduce the population using its welfare system. The idea is that homeless people would be transported (at the state’s expense) by ship or plane back to where they came from (or, at least, some state other than Hawaii).

The main argument for this is financial: while transporting the homeless will have an initial cost, the claim is that this will be recouped by the savings arising by not having the person utilizing the state’s welfare system.

A financial objection to this is that the cost of running the program will exceed the savings. After all, it is not just a matter of buying a homeless person a ticket—there would need to be the usual bureaucracy to make all this happen. There is also the obvious concern that people would come to Hawaii knowing that they would be guaranteed a trip home at the taxpayers’ expense—this is a rather obvious potential unintended consequence.

A non-financial concern is that compelling American citizens to leave a state without their consent would seem to be legally problematic. That is, the state cannot simply round up the homeless and load them onto a ship bound for California. There are, of course, ways that this could be worked around and laws could be passed to allow just that to occur. However, as it stands, the state would have to rely on people voluntarily choosing to leave. The problem is that if people are there for the welfare, the promise of a free trip out of the state would probably not be appealing. This is not to say that some people would not take this option, but it seems unlikely that it would result in a significant purge of the homeless.

There is also to moral concern regarding the ethics of addressing the homeless problem by shipping homeless people elsewhere. In addition to the initial moral concern about shipping people out of the state, there is also the concern regarding where the people will be sent. After all, it hardly seems right for Hawaii to try to “solve” its problem by shipping homeless people to some other state or states. To use an analogy, this seems like a parent who “solves” the problem of the expense of taking care of his children by shipping them off to another relative. This hardly seems right for the children or the relatives.

Naturally, a general argument can be made against welfare.  By arguing that the relation between the state and the homeless is such that there is no obligation to provide them with welfare, it could be contended that the solution to the homeless problem is to simply stop providing welfare to them (or to severely reduce it). This would “solve” the problem in that even if the homeless elected to remain in a state, they would receive nothing. While this option has been proposed, it certainly seems to be a wicked thing to do—at least in regards to those who are homeless through no fault of their own.  Also, this “solution” would simply move the problem—the homeless would presumably leave the state with no or little welfare for a state with a “better” system, thus burdening this state. If all the states elected to cease to provide welfare, the migration would presumably stop, but the moral price of an entire nation turning its back on the homeless would be high.


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Violent Video Games (Again)

I have been using my budget-cut based summer break from teaching to do various home improvements. The point of mentioning this is that I have been alternating between baking in the Florida sun and being exposed to “second hand paint fumes” (as opposed to directly huffing the stuff) as such, my writing might be a bit off. I have checked for any obvious weirdness (well, weirdness beyond the usual sort), but I apologize in advance for any heat/paint induced lapses in logic. I blame the flying frogs that seem to be infesting my house now. In any case, down to business.

The supreme court recently ruled that California’s law banning the sale of  video games to minors that “depict serious injury to human beings in a manner that is especially heinous, atrocious, or cruel.” The ruling was, of course, based on the first amendment.

Being both a gamer and an ethicist, I have thought (and written) a fair amount about the banning video games. On the one hand, a very reasonable case can be made for placing age based restrictions on video games. While studies of the impact of virtual violence on children are hardly conclusive, it seems reasonable to accept that exposure to virtual violence can have an impact on how the child thinks. As Aristotle has argued, people become habituated by what they do. Children are, of course, even more likely to be influenced. They are more receptive than adults and tend to lack the cognitive resources that adults are supposed to possess. As such, it seems reasonable to keep young children away from violence-even the virtual sort.

On the other hand, there are reasonable grounds for rejecting such bans. First, there are reasons for doubting that such games have a significant impact on children. The psychological studies are open to question and, of course, humans seem to be naturally prone to violence ( the stock “we like violent games because we are violent, we are not violent because of the games” argument). When I was a kid, long before violent video games, we spent a lot of time playing war. While the effects were not very special (cap guns), we certainly did act out killing each other. When violent video games came along, they simply allowed me to do what I had done as a kid (play at killing) only with ever better graphics and effects). As such, banning violent video games to protect children from the influence of violence seems like something that simply will not work, thus making such a law unnecessary.

Second, there is the matter of freedom of expression and consumption. While minors do have a reduced right of freedom of consumption (they cannot but alcohol, tobacco, guns or porn), imposing on their freedom only seems justified when it protects them from a significant harm in cases in which they lack the judgment to (in theory at least) make an informed choice. Even if violent video games have a harmful impact, it can be contended that the harm is not on par with that of adult vices such as alcohol or tobacco but rather on par with junk food. So, just as it is sensible to think that children should not eat junk food, yet also think there should not be laws banning children from buying candy bards, it seems sensible to think that although young kids should not buy violent video games, there should not be laws against doing so.

Third, there is the matter of what is fit for the state to control and what is fit for parents to control. There are, obviously enough, matters that should be handled by the state and those that should remain a matter of parental choice.  Alcohol, guns and tobacco are so dangerous that it seems reasonable that the state has a interest in keeping children away from these things by force of law. There is also a category of things were the state should aid parents in making choices, such as diet and exercise, but where the state should not intervene except in extreme cases. As noted above, I am inclined to put violent video games in the category of junk food. As such, parents should be informed about what the games contain (which is already done by the rating system) and the choice of whether or not their children play the games or not should be up to them. Naturally, children who lack parents or whose parents are dangerously incompetent will fall under the domain of the state, but these would be relatively rare cases.

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Virtual Violence & Children

World of Warcraft: Wrath of the Lich King
Image via Wikipedia

While there is more than enough real violence in the world, the Supreme Court of the United States is turning its attention to a law suit regarding California’s law that regulates the sale of violent video games to minors.

Being a gamer, I am well aware of the sort of extremely violent content of certain video games. I am also aware that games, like movies, come with a rating that makes it fairly clear as to what sort of content the game features. However, the age based rating system does not actually prevent younger people from buying the game. So, for example, a nine year old could walk into a game store and walk out with a video game rated for mature (17+) audiences and then spend the rest of the day killing virtual hookers and stealing virtual cars. Assuming, of course, that he was allowed to do so by his parent(s) or guardian. Not surprisingly, this possibility does raise some legitimate concerns.

The focal point of the conflict is between free expression and the notion that the state should protect children from possible harm.

On the side of freedom of expression, the concern is that imposing restrictions based on the content of video games would be a form a state censorship and thus an imposition on the legitimate rights of game makers and their customers. Since there are very good arguments for freedom of expression and freedom of consumption (as usual, I defer to Mill here), the case against restricting the sale of violent video games to minors seems to be rather strong.

Of course, those who favor such restrictions can also make a strong case. After all, there are legitimate concerns that violent video games can influence the behavior of children and have other negative consequences. Perhaps the strongest foundation for banning such sales is that children are generally regarded as lacking the same rights as adults when it comes to consuming potentially harmful products. To use some obvious examples, children cannot legally purchase tobacco, alcohol or pornography. If violent video games fall into the category of being harmful and suitable only for adults, the arguments against allowing children to buy smokes, booze and porn can thus be employed against violent video games. In general, a reasonable case can be made that children should be subject to more restrictions than adults-even Mill takes this view. At the very least, children are far less capable of making rational decisions and tend to be more vulnerable than adults (of course, adults can be irrational and vulnerable as well).

One obvious concern is that if censorship is permitted on the basis of violence (something Plato would agree with) then this opens the door to more restrictions. For example, I am looking at the warning label on Wrath of the Lich King and it warns me that in addition to blood and gore the game features suggestive themes and the use of alcohol. Perhaps the next step will be to limit games that have such content. Then the next step might be to restrict movies or even books that mention such things. This is not, of course, a slippery slope argument. Rather, it is a matter of precedent: if the sale of video games can be restricted based on content, then this would seem to extend logically to other media, such as books.

Of course, video games do differ from other media in that they are interactive and this might entail that they have a stronger influence on children. So, for example, being the one to virtually run over hookers in a stolen  car would have more impact than merely reading about a person running over hookers. Or seeing a story on the news about people being killed for real. Or living in a violent world. This interactivity might provide the basis for a relevant difference argument and a way to prevent (if desired) a slide from video games to other media (such as books).

Another avenue that the video game censors have gone down is that of pornography. As noted above, minors cannot legally buy porn. If it is right to ban the sale of porn to kids, then the arguments for this can probably be modified to argue against allowing kids to buy violent video games. Not surprisingly, Plato argues for banning material relating to both violence and lust. His argument, oversimplified a bit, is based on the corrupting influences of such material. Of course, Plato argued for a comprehensive ban and not just a restriction on selling to minors. This does lead to the obvious question: if something is too harmful to sell to children, then might it not be too harmful for adults as well? Of course, the usual counters are that adults should have the liberty to harm themselves (as per Mill) and that adults are better able to resist the nefarious influence of such things (or that it is okay for adults because they are adults).

I am somewhat divided on this issue. On the one hand, I am for freedom of expression and consumption. Hence, my general principle is to oppose such censorship/restriction on the basis of liberty (availing myself of Mill’s arguments). On the other hand, having played video games such as the  Grand Theft Auto games I am aware that some games feature content that strikes  me as inappropriate for kids. For example, a friend once asked me if she should get Grand Theft Auto III for her son. Without hesitation,  I said “no.” My reasoning was that a young kid lacks the intellectual and emotional development needed to confront such violent and sexual content. I did see the irony in this: a person should be mature before playing what might seem like a morally immature game. However, I believe that I gave the right advice and would follow the same approach if I had kids of my own. Not surprisingly, things change a bit when one switches from rights in the abstract to what, for example, your own child will be playing.

There is, however, still the question of what the state should do. After all, there is a distinction between what I would suggest to my friends who have kids and what I would want to be a matter of law. For example, I think that kids should not eat junk food all the time, but I would be against a law banning the sale of junk food to kids. Rather, this is something that the parents (or guardians) should handle. While junk food is not healthy, the danger it poses is not so immediate that the compulsive power of the state is required. Rather, this seems best suited for parental control. In short, the burden of proof rests on those who would extend the power of the state.

In the case of video games, I take a similar view. While I do recognize that video games can (like junk food) things that are not so good, they do not seem to present a clear an immediate health threat that requires the imposition of the compulsive power of the state. Rather, this is a matter that seems to be more suited for parental control.

It might be replied that some children do not have adequate supervision and hence might just buy violent video games and play them. However, I am inclined to be more concerned that the children lack such supervision than with them playing a violent video game. In fact, if that is the worst they do, then things could be far worse.

It might also be argued that children would simply buy such games and play them without their parents being aware of it. Hence, making the sale of such video games illegal would provide an extra barrier between the kids and the content of the games. While this does have some appeal, kids can easily bypass this. After all, if they have their own money to buy video games, they can buy them online or get someone else to buy them. As such, the protection value of such a ban would seem to be rather minimal if the parents are, in effect, unable to supervise their children.

As such, I hold that the sale of such video games should not be restricted by law. However, I do think that making the nature of the content clear so that parents (and others) can make informed choices is a good idea. I also hold that parents should male responsible choices about what games their kids play. Of course, what counts as a responsible choice is a matter for another time.

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