Quotulatiousness

July 26, 2014

QotD: French “ultra-liberalism”

Filed under: Bureaucracy, Europe, Government, Quotations — Tags: , , , , — Nicholas Russon @ 00:01

The French press, media and intellectuals castigate ad nauseam what they call the ‘ultra-liberalism’ of the present-day western world: and their characterization, as intellectually lazy as it is inaccurate, now goes virtually by default. Very few are the commentators who see through its inaccuracy. That a country whose public sector accounts for more than half of economic activity, and which is as highly-administered as France (and, it must be said, often well-administered, for who would not rather go on the Paris Metro than the New York Subway?), cannot plausibly be described as ‘ultra-liberal,’ ought to be perfectly obvious even on the most casual reflection, but alas it is not. If France is ultra-anything it is ultra-corporatist, but even that would be an exaggeration. And so present discontents are laid at the door of ultra-liberalism, though in fact a considerable proportion of the resentments and discontents of the young who approve of M’Bala M’Bala are attributable to the rigidity of the French labor market, which is caused precisely by an illiberal nexus of protections and restrictions.

The problem, then, is not ultra-liberalism but insufficient liberalism. The difference between France and other western countries, incidentally, is one of degree and not of type, though even degree can be important: illiberalism in the French labor market has in a matter of a few years turned London into one of the largest French-speaking cities in the world.

Theodore Dalrymple, “Illusions of Control in the Omnicompetent French State”, Library of Law and Liberty, 2014-01-07

July 15, 2014

The economic side of Net Neutrality

Filed under: Business, Economics, Technology — Tags: , , , , — Nicholas Russon @ 07:41

In Forbes, Tim Worstall ignores the slogans to follow the money in the Net Neutrality argument:

The FCC is having a busy time of it as their cogitations into the rules about net neutrality become the second most commented upon in the organisation’s history (second only to Janet Jackson’s nip-slip which gives us a good idea of the priorities of the citizenry). The various internet content giants, the Googles, Facebooks and so on of this world, are arguing very loudly that strict net neutrality should be the standard. We could, of course attribute this to all in those organisations being fully up with the hippy dippy idea that information just wants to be free. Apart from the obvious point that Zuckerberg, for one, is a little too young to have absorbed that along with the patchouli oil we’d probably do better to examine the underlying economics of what’s going on to work out why people are taking the positions they are.

Boiling “net neutrality” down to its essence the argument is about whether the people who own the connections to the customer, the broadband and mobile airtime providers, can treat different internet traffic differently. Should we force them to be neutral (thus the “neutrality” part) and treat all traffic exactly the same? Or should they be allowed to speed up some traffic, slow down other, in order to prioritise certain services over others?

We can (and many do) argue that we the consumers are paying for this bandwidth so it’s up to us to decide and we might well decide that they cannot. Others might (and they do) argue that certain services require very much more of that bandwidth than others, further, require a much higher level of service, and it would be economically efficient to charge for that greater volume and quality. For example, none of us would mind all that much if there was a random second or two delay in the arrival of a gmail message but we’d be very annoyed if there were random such delays in the arrival of a YouTube packet. Netflix would be almost unusable if streaming were subject to such delays. So it might indeed make sense to prioritise such traffic and slow down other to make room for it.

You can balance these arguments as you wish: there’s not really a “correct” answer to this, it’s a matter of opinion. But why are the content giants all arguing for net neutrality? What’s their reasoning?

As you’d expect, it all comes down to the money. Who pays more for what under a truly “neutral” model and who pays more under other models. The big players want to funnel off as much of the available profit to themselves as possible, while others would prefer the big players reduced to the status of regulated water company: carrying all traffic at the same rate (which then allows the profits to go to other players).

July 12, 2014

Sriracha factory dispute – “THIS PROBLEM NEEDS TO BE TAKEN CARE OF NOW, NOT LATER!!!!!”

Filed under: Bureaucracy, Business, Government, Health, USA — Tags: , , — Nicholas Russon @ 00:03

Sriracha rooster sauceSriracha fans were relieved when the Huy Fong plant in California was allowed to re-open after a farcical ‘elf-and-safety’ shakedown (original story here). Reason‘s Zenon Evans has more on the behind-the-scenes bullshit that triggered the near-national panic among hot sauce consumers:

The public just got some new insight into one of the last year’s spiciest (and fishiest) political kerfuffles: the push by the city council of Irwindale, California to shut down Huy Fong Foods, the makers of Sriracha hot sauce. The tireless freedom-of-information requesters at MuckRock yesterday published internal council documents, revealing theatrically furious communication among the local government officials and a desire to exploit regulations to force the company into submission.

[...]

The newly revealed memos and emails show that some members of government were actually “happy to report the scent of chilies” emanating when production began in 2012, but, a year later Ortiz and Councilman David Fuentes, who also lived near the factory (and also ultimately recused himself from the matter), saw a total shutdown as the first and only appropriate course of action.

“I just received notice that the odor at this place is very strong. We must proceed with SHUT DOWN immediately,” demanded Ortiz in an email, despite the fact that he had previously applauded how much safer that part of town had become since the $80 million business moved in.

Fuentes was even more adamant. “THIS PROBLEM NEEDS TO BE TAKEN CARE OF NOW, NOT LATER!!!!!,” he emailed his fellow council members in October. Notably, he also suggested that “if we need to shut them down for non compliance, then let’s do what we have to do.”

Although it’s not clear exactly what Fuentes meant by “non compliance” or if the council made moves based on his plot, the city did sue Huy Fong and got a judge to order a partial shutdown in November, even though that the judge acknowledged a “lack of credible evidence” regarding the health risk claims. Likewise, California’s health regulators stepped in and changed their own food rules in December as they demanded a 30-day hold on operations, which created fear of a national Sriracha shortage.

July 10, 2014

Millennials starting to get jaded about the virtues of government

Filed under: Economics, Government, USA — Tags: , , , , , — Nicholas Russon @ 07:57

The latest Reason-Rupe poll has some interesting results on the Millennial generation:

A Reason-Rupe survey of 2,000 Americans between the ages of 18 and 29 finds 66 percent of millennials believe government is inefficient and wasteful — a substantial increase since 2009, when just 42 percent of millennials said government was inefficient and wasteful.

Nearly two-thirds of millennials, 63 percent, think government regulators favor special interests, whereas just 18 percent feel regulators act in the public’s interest. Similarly, 58 percent of 18-to-29 year-olds are convinced government agencies abuse their powers, while merely 25 percent trust government agencies to do the right thing.

The Reason-Rupe report finds this skepticism of government has millennials favoring general reductions to government spending and regulations:

  • 73 percent of millennials favor allowing private accounts for Social Security; 51 percent favor private accounts even it means cutting Social Security benefits for current and future retirees because 53 percent of millennials say Social Security is unlikely to exist when they retire
  • 64 percent of millennials say cutting government spending by 5 percent would help the economy
  • 59 percent say cutting taxes would help the economy
  • 57 percent prefer a smaller government providing fewer services with low taxes, while 41 percent prefer a larger government providing more services with high taxes
  • 57 percent want a society where wealth is distributed according to achievement
  • 55 percent say reducing regulations would help the economy
  • 53 percent say reducing the size of government would help the economy

Of course, along with those hopeful signs are a few that show millennials are still idealistic (i.e., socialistic) in other areas: higher minimum wages, guaranteed food and shelter for all, and raising taxes on the rich all got lots of support in the poll.

July 8, 2014

The wine trade, legal “adjuncts”, and honest labelling

Filed under: Law, Technology, USA, Wine — Tags: , — Nicholas Russon @ 14:47

In Wired, Christopher Null talks to Californian winemaker Paul Draper about what’s actually in the wine that you buy:

Unlike most food and drink, wine and other alcoholic beverages are governed not by the Food and Drug Administration (part of Health and Human Services) but by the Alcohol and Tobacco Tax and Trade Bureau (part of the U.S. Treasury). As the name suggests, the TTB’s primary goal is to collect taxes on booze and cigarettes, a longstanding vestige of Prohibition. Consumers have largely been left in the dark about what’s really inside the bottle.

Not everyone is thrilled about this, and as with many secrecy-laden industries, transparency is a buzzword that has a few wine industry leaders twittering. Their savior is Paul Draper, who has been lambasting adjuncts for years and who eschews their use at Ridge, where he’s been the chief winemaker since 1969. A legend in the business, his Cabernet placed fifth in the famous Judgment of Paris in 1976. His newest, somewhat Quixotic quest: to introduce full and truthful labeling to wine bottles. Ridge has published real ingredients labels on its bottles since 2012.

While Draper dislikes adjuncts, the enemy, he says, isn’t just cheap wine: It’s also winemakers’ increasing thirst for wines that are ready to drink without significant aging. This not only drives consumer sales, it also helps to drive higher scores from wine critics, as even professionals can struggle to rate a wine based on its future potential.

That in turn has led to a more nefarious way in which adjuncts are being deployed. While they are often used as an easy way to make cheap wine more palatable, adjuncts are increasingly being applied to high-end wines to eke another couple of points out of the critics. “You have that machine. It costs a half a million or a million dollars and it’s sitting in your winery,” Draper says. “The temptation to use it in years when you don’t need to use it is immense.” But ultimately, he complains, “If you use these techniques, you aren’t making fine wine.”

You’d think the various adjuncts wouldn’t make it past the sommeliers, high-end buyers, and big-name critics of the wine world, that such chemical or mechanical shortcuts would be picked up by their well-trained palates. But the truth is that these things can’t be sniffed, tasted, or spotted unless they are overused.

June 30, 2014

QotD: The new American ruling class

Filed under: Bureaucracy, Government, Quotations, USA — Tags: , , — Nicholas Russon @ 00:02

Our political bureaucracies are grasping and vicious, and some of the larger of them are dominated by people who are, if we’re being frank, not especially bright. No society can long thrive by making its creators and innovators subservient to its pimps and thieves. But agencies with the power to tax or the power to pay themselves out of taxes have the power to command, and, human nature being what it is, it is not surprising that their executives use that power to extort for themselves extraordinary levels of compensation (occasionally through criminal means, as in the Bell case), even as they bore us all to death talking about the sacrifices they have endured on behalf of their careers in “public service.” [...]

It is baffling that my progressive friends lament the influence of so-called big money on government while at the same time proposing to expand the very scope and scale of that government that makes influencing it such a good investment. Where government means constables, soldiers, judges, and precious little else, it is not much worth capturing. Where government means somebody whose permission must be sought before you can even begin to earn a living, when it determines the prices of products, the terms of competition, and the interest rates on your competitors’ financing, then it is worth capturing. That much is obvious. Progressives refuse to see the inherent corruption in the new ruling class — and, make no mistake, we now have a ruling class — because it is largely made up of them, their colleagues, and people who are socially and culturally like them and their colleagues. Getting a couple hundred grand a year to teach one class doesn’t look so crazy if you think you might be the guy who gets the check next time around. You can be an anti-elite crusader on behalf of the poor and disenfranchised from your million-dollar mansion, even if you never find yourself so much as downwind from a poor person, without fearing charges of hypocrisy: Ask Senator Warren. Of course Chelsea Clinton does not have the sense or the good taste to be embarrassed when talking about her blasé attitude toward money: Money is invisible to her for the same reason that water is invisible to a fish — she’d notice it if it weren’t there, and flap like a desperate landed mackerel until she’d secured her next big payday.

Kevin D. Williamson, “Politics Pays”, National Review, 2014-06-29.

June 24, 2014

“How should we do x?”

Filed under: Government, USA — Tags: , , , — Nicholas Russon @ 09:11

The urge to provide a national (or even a global) solution to a given problem is almost always mistaken. Kevin Williamson explains why:

“How should we do x?” The main problem is not the answer, but the question itself, and the assumptions behind that question, the belief that an answer exists.

Some policies must, by their nature, be implemented at the national level. If you’re going to have a sovereign nation-state, you need a national defense apparatus (which is not to say you need our national-defense apparatus; there are alternatives), and you probably need a national immigration policy, etc. The basic architecture of the current American constitutional order, which is a remarkably wise and intelligent piece of work, contemplates national policies in those areas in which the several states interact with foreign powers and in those cases in which the states cannot coordinate efforts or resolve disputes among themselves on their own. That, along with some 18th-century anachronisms (post roads, etc.) and some awful economic superstitions (political management of trade, a political monopoly on the issuance of currency), constitutes most of what the federal government is in theory there to do. That and fighting pirates and others committing “felonies on the high seas,” of course, which is awesome, and we can all feel patriotic about fighting pirates.

But … if we look at federal programs by budget share, almost nothing that Washington does requires a national policy. There’s national defense, of course, at around 20 percent of spending; you may believe, as I do, that that number is probably too high, but national defense is a legitimate national endeavor. But most federal spending is on various entitlement programs — Social Security, Medicare, Medicaid, and various other welfare benefits. There is not much reason for any of these programs to exist at all — government is a criminally inept pension planner and a thoroughly incompetent insurance company — and there is very little reason for any of them to exist as uniform, one-size-fits-all national programs. Start digging into that non-defense discretionary spending and you end up with very little more than a catalog of crony payoffs and political favoritism.

There is no more reason to believe that a single government-run pension scheme is in each individual’s best interest than to believe that a single city or single model of car is right for everybody. And the people who design and plan these programs know that. The point of Social Security — like the point of insisting that health insurance is “a right” rather than a consumer good — is to redefine the relationship between citizen and state. That is the real rationale for a national pension scheme or a national insurance policy. For several generations now, we’ve been changing the very idea of what it means to be an American citizen. It used to mean being entitled to enjoy liberty and republican self-governance under the Constitution. Eventually, it came to mean being eligible for Social Security, functionally if not formally. Now it means being eligible for Obamacare. The name of the project may change every generation, and its totems may evolve from Bismarck to Marx to “the experts” — that legion of pointy-headed Caesars who are to be the final authority in all matters in dispute — but the dream remains the same: society as one big factory under the management of enlightened men with extraordinary powers of compulsion.

June 18, 2014

QotD: Obesity and the federalization of food

Filed under: Bureaucracy, Government, Health, Quotations — Tags: , , — Nicholas Russon @ 06:35

One of the problems with scrupulously “sanitized” food is that it doesn’t taste of anything very much, which may be why people consume it in large quantities: With food, if the taste doesn’t satisfy you, you chow until the sheer quantity does. I’ve no research on the subject and my theory may be as full of holes as a Swiss cheese, but the fact is that the federalization of food has coincided with the massive expansion of obesity in America, and I’m inclined to think these two things are not unrelated.

Mark Steyn, “Cheeseboarder Patrol”, SteynOnline.com, 2014-06-12.

June 12, 2014

QotD: Regulating cheese

Filed under: Bureaucracy, Health, Quotations, USA — Tags: , , , , — Nicholas Russon @ 07:00

France, for all its faults, has genuinely federalized food: a distinctive cheese every 20 miles down the road. In America, meanwhile, the food nannies are lobbying to pass something called the National Uniformity for Food Act. There’s way too much of that already.

The federalization of food may seem peripheral to national security issues, and the taste of American milk — compared with its French or English or even Québécois equivalents — may seem a small loss. But take almost any area of American life: what’s the more common approach nowadays? The excessive government regulation exemplified by American cheese or the spirit of self-reliance embodied in the Second Amendment? On a whole raft of issues from health care to education the United States is trending in an alarmingly fromage-like direction.

Mark Steyn, “Live Brie or Die!” SteynOnline.com, 2014-03-13

June 8, 2014

Regulating cosmetics

Filed under: Business, Government, Health — Tags: , , — Nicholas Russon @ 11:43

Jeffrey Tucker discusses the coming crash in the world of make-up:

The organization Campaign for Safe Cosmetics doesn’t just want you to be able to have new choices about the makeup or other products you buy. It wants the FDA to be able to ban and recall products. It will decide for you what is and isn’t safe.

And it is prevailing against the industry itself, which has no interest whatsoever in selling unsafe products, but precisely the opposite. The industry is already ridiculously overregulated.

What’s the excuse? The usual nonsense about safety and security and health, along with predictable headlines about how your shampoo is giving you cancer. There is a crowd of lobbyists backed by regulators who seem to believe that all of modernity is corrupting and horrible and must be reversed until we are living in the most-primitive state of being, sans makeup, of course.

In other words, cosmetics are going the way of everything else. The quality of the product will be depleted by regulations, just as with indoor plumbing, electricity, cars, light bulbs, soaps and gas-powered tools. Entrepreneurship will be hindered and truncated. Innovation will stop. In a few years, you will wonder: Whatever happened to makeup and deodorant and hair spray that actually works? Prepare: The end is near!

Already, I’ve heard many women complain that cosmetics today are far worse than they were 10 years ago. The colors don’t behave they way they should, and color is mainly what the FDA currently controls. I don’t doubt that whatever problems exist are due to government regulations. Whenever you see consumer products that decline in quality to the point that you have to pay vastly more for something of good quality, or that high quality suddenly becomes completely unavailable, you will find the hand of government if you look hard enough.

June 1, 2014

In the Progressive Era, “big business led the struggle for the federal regulation of the economy”

Filed under: Business, Government, History, USA — Tags: , , , , — Nicholas Russon @ 11:00

Timothy Carney says we should know much more about socialist historian Gabriel Kolko and his careful debunking of the “Teddy Roosevelt as trust-buster” myth:

Every American knows the fable of the Progressive Era and that “trust buster” Teddy Roosevelt wielding the big stick of federal power to battle the greedy corporations. We would be better off if more people knew the work of the man who dismantled this myth: historian Gabriel Kolko, who died this month at age 81.

Kolko was a self-described socialist and a Harvard-educated historian, but he had little use for the liberal political establishment’s pious regard for the Progressive Era of 1900 to 1916. And he was never credulous enough to believe that government intervention in the economy was generally in the public interest.

For today’s politics, Kolko’s most important book was The Triumph of Conservatism, published in 1967. His thesis: “The dominant fact of American political life” in the Progressive Period “was that big business led the struggle for the federal regulation of the economy.”

The standard history of the Progressive Period — which painted Teddy and the Feds as the scourge of Big Business — relied too much on the public rhetoric of TR and his cohorts. Kolko dug deeper to show how Big Business truly felt about Big Government, and how the Progressives truly felt about Big Business.

Many corporate titans in the early 20th Century, buying into the pervasive hubris of the day, believed that a state-managed economy was the inevitable end of a rational society — the conclusion of what Standard Oil’s top lobbyist Samuel Dodd called the “march of civilization.” Competition, in their eyes, was destructive redundancy.

[...]

Liberal scholar William Galston at the Brookings Institution explains the economics at play. “Corporations have sizeable cash flows and access to credit markets, which gives them a cushion against adversity and added costs,” he wrote in 2013, explaining why the big guys often welcome regulation. “[S]mall businesses often operate much closer to the margin and are acutely sensitive to policies that threaten to drive up costs.” Also, “CEOs can hire experts to help them cope with added regulatory burdens and can spread the costs over a large workforce.”

Kolko’s research smashed the favorite tales of the Progressive myth. When Upton Sinclair wrote The Jungle, which included descriptions of rancid meat-packing plants, Roosevelt saw Sinclair as personally despicable, but a useful asset in his quest to impose federal meat inspection. Sinclair opposed Roosevelt’s regulation, and Kolko relates that “the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors.”

By “conservatism,” Kolko meant “stability,” and preservation of the status quo. This is often the aim of corporate giants. It is consistently the consequence of federal action. And it is reliably the enemy of entrepreneurship, economic growth and free choice.

May 31, 2014

Shock, horror! Ezra Levant’s publisher took government grants!

Filed under: Business, Cancon, Media — Tags: , , , , , , — Nicholas Russon @ 09:21

In the Globe and Mail, Simon Houpt looks at the rise and rise of Ezra Levant and finishes with what he clearly thinks is a “gotcha” moment:

… for a man who seems to have studied his American forebears so extensively, he has failed utterly to learn how to mimic the persuasive charms of a Bill O’Reilly or the wackadoodle authenticity of a Glenn Beck. He has a genuinely nasty streak that flares up in his attacks – on the Roma people, for example – that have landed him in hot water with the Canadian Broadcast Standards Council.

He seems less interested in free speech than in listening to his own speech. Perhaps fatally, he has no visible sense of humour about himself.

In Groundswell, he has great fun mocking one of his favourite targets: Hollywood stars, whom he accuses of gross hypocrisy for promoting environmental causes while flying around in private jets. He points to Matt Damon’s anti-fracking drama Promised Land, which was backed in part by financing from the United Arab Emirates. And he mocks Josh Fox, the director of the anti-fracking documentaries Gasland and Gasland 2, for being a one-time New York-based actor.

Yet there is more than enough hypocrisy to go around: Levant is a critic of government support whose books have been published by a company that took plenty of government money until a recent change in ownership precluded the practice; a free-marketeer who works for a network that spent months last year trying to convince regulators to let it extract a monthly payment from every TV subscriber in the land.

At one point in Groundswell, Levant suggests activists are primarily driven by the salaries they receive. It’s a worldview that is so breathtakingly cynical that we’re left to wonder if Levant himself would blithely change his position for a fatter paycheque. If true, what kind of free-speech champion is that?

As far as the publisher collecting government money … most of the Canadian publishing business does that. It’s an unusual publishing company that manages to avoid suckling at that particular teat. Sun TV’s campaign for a better placement in cable TV packages certainly didn’t show the company in a good light, but the regulators have deliberately created a two-class system for cable, with the favoured channels required in each cable offering (a subsidy-by-another-name) and the disfavoured ones excluded. Sun TV could have taken the high road, but they’d have gone out of business for no purpose, and it wouldn’t have changed the system at all. (Full disclosure: I don’t watch Sun TV, although I have read a couple of Levant’s books.)

May 25, 2014

QotD: Free markets and quality

Filed under: Business, Economics, Quotations — Tags: , , — Nicholas Russon @ 00:01

“It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” Adam Smith, The Wealth of Nations

A tender medallion of steak, a foaming pint of bitter and a crusty roll still hot from the oven — no wonder that Adam Smith chose an alliterative trio of artisanal food providers to make his point about the benefits of capitalism. If he had chosen a junk bond salesman, a fund manager, and a quantitative analyst, wielding a Gaussian copula in an effort to price a synthetic credit derivative, his defence of the market mechanism might not have resonated down the centuries in quite the same way.

Smith’s point was a good one. We are unlikely to give our custom to butchers who poison us, brewers who serve foul beer or bakers who overcharge; food sellers find it profitable to serve decent food at reasonable prices. The system needs some oversight — hygiene inspectors, trading standards officers, the Competition Commission — but the main engine of quality is the market mechanism. People prefer cheap and delicious food to food that is pricey and tastes horrid — and that fact alone delivers more than regulators ever could.

Tim Harford, “Why can’t banking be more like baking?”, TimHarford.com, 2013-11-05

May 19, 2014

Gillespie – Don’t let the FCC ruin the internet!

Filed under: Bureaucracy, Business, Government, Liberty, Media — Tags: , , , — Nicholas Russon @ 10:51

Nick Gillespie thinks that the uproar about net neutrality may end up with the worst of all possible solutions by letting the FCC control the internet:

Reports of the imminent death of the Internet’s freewheeling ways and utopian possibilities are more wildly exaggerated and full of spam than those emails from Mrs. Mobotu Sese-Seko.

In fact, the real problem isn’t that the FCC hasn’t shown the cyber-cojones to regulate ISPs like an old-school telephone company or “common carrier,” but that it’s trying to increase its regulatory control of the Internet in the first place.

Under the proposal currently in play, the FCC assumes an increased ability to review ISP offerings on a “case-by-case basis” and kill any plan it doesn’t believe is “commercially reasonable.” Goodbye fast-moving innovation and adjustment to changing technology on the part of companies, hello regulatory morass and long, drawn-out bureaucratic hassles.

In 1998, the FCC told Congress that the Internet should properly be understood as an “information service,” which allows for a relatively low level of government interference, rather than as a “telecommunication service,” which could subject it to the sort of oversight that public utilities get (as my Reason colleague Peter Suderman explains, there’s every reason to keep that original classification). The Internet has flourished in the absence of major FCC regulation, and there’s no demonstrated reason to change that now. That’s exactly why the parade of horribles — non-favored video streams slowed to an unwatchable trickle! whole sites blocked! plucky new startups throttled in the crib! — trotted out by net neutrality proponents is hypothetical in a world without legally mandated net neutrality.

Apart from addressing a problem that doesn’t yet exist, if you are going to pin your hopes for free expression and constant innovation on a government agency, the FCC is about the last place to start. For God’s sake, we’re talking about the agency that spent the better part of a decade trying to figuratively cover up Janet Jackson’s tit by fining Viacom and CBS for airing the 2004 Super Bowl.

May 16, 2014

The built-in confusion about net neutrality

Filed under: Business, Government, History, Technology, USA — Tags: , , , — Nicholas Russon @ 12:33

While I’ve been following the net neutrality debate, I was still unconvinced that either side had the answers. In a post from 2008, ESR helps to explain why I was confused:

Let it be clear from the outset that the telcos are putting their case for being allowed to do these things with breathtaking hypocrisy. They honk about how awful it is that regulation keeps them from setting their own terms, blithely ignoring the fact that their last-mile monopoly is entirely a creature of regulation. In effect, Theodore Vail and the old Bell System bribed the Feds to steal the last mile out from under the public’s nose between 1878 and 1920; the wireline telcos have been squatting on that unnatural monopoly ever since as if they actually had some legitimate property right to it.

But the telcos’ crimes aren’t merely historical. They have repeatedly bargained for the right to exclude competitors from their networks on the grounds that if the regulators would let them do that, they’d be able to generate enough capital to deploy broadband everywhere. That promise has been repeatedly, egregiously broken. Instead, they’ve creamed off that monopoly rent as profit or used it to cross-subsidize competition in businesses with higher rates of return. (Oh, and of course, to bribe legislators and buy regulators.)

Mistake #1 for libertarians to avoid is falling for the telcos’ “we’re pro-free market” bullshit. They’re anything but; what they really want is a politically sheltered monopoly in which they have captured the regulators and created business conditions that fetter everyone but them.

OK, so if the telcos are such villainous scum, the pro-network-neutrality activists must be the heroes of this story, right?

Unfortunately, no.

Your typical network-neutrality activist is a good-government left-liberal who is instinctively hostile to market-based approaches. These people think, rather, that if they can somehow come up with the right regulatory formula, they can jawbone the government into making the telcos play nice. They’re ideologically incapable of questioning the assumption that bandwidth is a scarce “public good” that has to be regulated. They don’t get it that complicated regulations favor the incumbent who can afford to darken the sky with lawyers, and they really don’t get it about outright regulatory capture, a game at which the telcos are past masters.

[...]

In short, the “network neutrality” crowd is mainly composed of well-meaning fools blinded by their own statism, and consequently serving mainly as useful idiots for the telcos’ program of ever-more labyrinthine and manipulable regulation. If I were a telco executive, I’d be on my knees every night thanking my god(s) for this “opposition”. Mistake #2 for any libertarian to avoid is backing these clowns.

In the comments, he summarizes “the history of the Bell System’s theft of the last mile”.

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