Net neutrality vs. house republicans (or "scalded by tea")

Net neutrality vs. house republicans (or "scalded by tea")

Summary: House Republicans' war against net neutrality rules is symptomatic of a gross simplification of economic principles that is typical of today's Tea-flavored Republican party.

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John Boehner thinks net neutrality rules are a threat to freedom in the United States (paraphrased, but that's the thrust; click the link at left to see him in his own words). It's a weird concept, given that Capitalism is replete with restrictions on freedom. I'm not free to borrow my neighbor's car without asking, and when I sign a contract that I break, my freedom is greatly impinged by the full force of the legal system that will fall upon my rule-breaking head. I can't reprint the latest Stephen King novel and sell it in a book store, and if I want to build a skyscraper, the government will spend lots of time making sure I adhere to stacks of engineering standards.

Capitalism, in other words, isn't economic anarchy. It requires the creation of walls and barriers that guide human productive activity in useful directions. It's a framework, built on rules created and enforced by government, that is as artificial as the gleaming reflective skyscrapers in downtown Los Angeles.

Granted, Capitalism is designed to harness natural impulses. Humans tend to be very good at focusing on the things that affect them directly, an impulse that has been described as "selfish" by some economists, but is really just a reflection of the human condition. We are, for all intents and purposes, ships sailing alone in life, and though we may lash ourselves to other vessels periodically (my wife may resent that comparison), our experiences are still uniquely our own. No outside entity can gather the same level information about our wants, needs and requirements, and that's why central planning boards have a hard time out-thinking the collective rationality of individual buyers and sellers. Those vessels navigate the economic seas armed with more accurate information than any third party could possibly collect. That is, in one paragraph, the essence of Austrian Economist Ludwig Von Mises criticism of Socialism.

But therein lies the paradox of Capitalism. Yes, you need to respect the collective decision-making power of the masses, as it has the most accurate information upon which to base choices. On the other hand, you must have a structure that channels those impulses. If that wasn't the case, Somalia with its absence of government would be a Capitalist paradise. The walls that guide the capitalist mice through the maze are as essential to the functioning of capitalism as the mouse's desire to find that yummy cheese.

There is a point to all of this, and it is that, in my humble opinion, Speaker of the House John Boehner (R-OH) and the entire Tea Party-inspired Republican party have fetishized one critical aspect of Capitalism as if it was the only thing that matters. I spoke in a previous article about fixating on the engine to the exclusion of the wheels, chassis and steering wheel (among other things). Just to add to my metaphorical heap, I think the current Republican stance on net neutrality is like telling a long distance runners to eat carbohydrates exclusively, all the while ignoring the fact that most keel over in a few weeks from scurvy or some other vitamin deficiency.

As I explained in that previous article, ISPs and providers of network access have a real need to make money from their infrastructure. If they don't, bandwidth constraints tighten rather rapidly as providers have little incentive to boost capacity to support the massive shift in user behavior precipitated by rapid growth in the consumption of Internet video. I'm contributing to the bandwidth problem, as I have cut the chord to subscription cable services, replacing my television experience with what I can stream through my XBOX 360 (your mileage may vary; I have a second child on the way, so it suits me perfectly).

There is, however, an inherent conflict of interests. Carriers have a strong economic motivation to do things to hinder competitors like Netflix who are "stealing" away subscribers from their built-in video streaming options. They don't even have to do something so crude as banning access to Netflix servers. They can just price things such that Netflix, as an alternative, is uneconomical. Don't think carriers would do that? Did you think banks would erase the risk premium on bad loans by packaging them into securities that were sold to Icelandic pensioners (among others)?

It's a simple and obvious choke point. Carriers control the data pipe that leads into your home. Due to the difficulties of laying parallel wires that serve the same customers, most users have, if they are lucky (and many aren't), only two credible alternatives for fixed-line broadband. That is, by any standard, a monopoly position as unassailable as the oil pipeline's control over the distribution of an essential source of power across this country (which is why Reagan turned them into common carriers). Why wouldn't it makes sense to make sure carriers can't abuse that position?

Arguing that the FCC's rules aren't properly designed to do what they aim to do is one thing. What the Republicans are arguing, however, is essentially that the problem does not exist, couching it in soft, gauzy words like "freedom" and "constitution" to hide the fact that economic goals aren't their primary consideration. Badly understood abstract principles are what matter, and that is a serious problem.

Like I said before (and I can quote myself as much as I want): "I hate the language of rights." It obscures ability to deal with the goals we are trying to achieve, painting the battle between the different options in near-religious terms. How can one consider creating rules that prevent carriers from blocking video alternatives when what is being proposed is the functional equivalent of enslavement? It's like arguing with someone that believes that he can't get medical treatment for his child because God doesn't want him to.

As parting words to those who like to put everybody into neat and simple categories, I'm about as free market as it comes. I'm a big proponent of reducing global trade barriers, and believe that real freedom can only come when we stop hiding behind the walls of the places we were accidentally born and start thinking about the GLOBAL economy (and well being) as things that really matter. Sitting in my blog someday pile is a response to David Gewirtz' ridiculous notion that Apple should use robots to replace foreign workers so that approximately 1000 Americans can replace a 100,000+ Chinese work force (which I called the Cylon solution...never mind, it isn't important). Heck, I don't even think Reagan, the man who pushed through the biggest amnesty of illegal immigrants in this nation's history and was a driving force in the global free trade negotiations that led to the WTO, would have disagreed with me.

I'm a free trade, global freedom advocate. I just happen to understand what in the hell makes capitalism work, and it isn't some blind devotion to the notion of the invisible hand. If that was the case, Japan's MITI program wouldn't have built all the major Japanese electronic manufacturers from the dust of WWII, Korea's Chaebol wouldn't have given us Samsung and LG, America's university system wouldn't be the best in the world (18 of the top 20 are American, and many of those are public), and a simple thing like turning oil pipelines into regulated common carriers wouldn't have made natural gas competitive. Granted, Japan and Korea supported their favored industries for too long, and there is always a limit to what government should do in education (K-12 education in the US is a marked contrast to our experience at the university level), but the principle stands. Government is an essential component of capitalism, and all the gross simplifications won't change that.

The invisible hand, in other words, is a force that only functions properly if provided the right context...and context takes work. Markets exist only in the presence of sensible regulations designed by smart people who have the incredibly difficult task of designing rules that guide the individual choices of billions of economic actors in useful directions. I don't pretend that is a simple thing to do, but I reject categorically Republican willful refusal to even try.

Absence of government isn't economic nirvana. It's Somalia. I sometimes wonder if today's Republican party understands that.

Topics: Government US, Government, Mobility

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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153 comments
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  • RE: Net neutrality vs. house republicans (or

    "If that wasnt the case, Somalia with its absence of government would be a Capitalist paradise"<br><br>Capitalism deals with the ownership of economic resources. The absence of government doesn't define capitalism, indeed the protection of private property can be undermined without the support of the state, which is exactly the case in Somalia.<br><br>The economic principles behind the free market and Smith's invisible hand are simple, they're not made so by their proponents.<br><br>Since the discrediting of controlled economies their proponents now talk of "sensible regulations". However it's no more obvious what constitutes "sensible" as other forms of government intervention.<br><br>Competitive markets are the goal, these are not always obtainable. Significant market failures exist in the real world. Use this measure when evaluating legislative impacts, not some imagined view of capitalism.
    Richard Flude
    • RE: Net neutrality vs. house republicans (or

      @Richard Flude He is definitely on the right track but has just a couple of things wrong. Replace capitalism with "free market" and he is dead on. The second problem is that you can't tie this directly to the Tea Party. They are all over the place. This particular issue is at the feet of Libertarians.

      Its the Libertarians with this pipe dream of a truly free market. They go on talking about market forces as if they are the laws of physics themselves and can't be bent, broken or ignored altogether. It completely ignores the exact types of situations described in this article where a governing body has to impose some rules. I don't mean to cast a light on all Libertarians but IMO they border on mental illness. A system like this will crash into complete turmoil in no time flat. Those that have began to back them in the Tea Party have put no thought into what they are saying. They have just joined into the anti-government sentiment. Once someone infringes on their IP as business owners they'd be calling on that same government to stop them.

      Then theres the markets where profit motive just doesn't make sense when crossed with human nature and neccesities....
      storm14k
      • RE: Net neutrality vs. house republicans (or

        @storm14k True, the tea party IS all over the place, but the republican leadership is responding to averages. The tea party certainly makes libertarian noises on average, so the republican leadership is responding to that.

        Libertarians fixate on the engine of capitalism, as a rule, when they aren't trapped by the language of rights, thus preventing them from properly evaluating goals. I certainly find plenty of agreement with some aspect of libertarian ideology, even if I don't buy the theology bit (theology, in this case, equals trying to slam everything into narrow holes oriented around rights).
        John Carroll
      • RE: Net neutrality vs. house republicans (or

        @John Carroll

        Its a matter of scale....much like physics ironically. Libertarian ideas work on a small scale like neighbor to neighbor business, community stores etc. Its not that the ideas are bad. Its just that they don't scale well and they refuse to believe that.
        storm14k
      • Wrong argument

        "Libertarians fixate on the engine of capitalism..."@John Carroll<br><br>Libertarians are fixated on individual liberty. We don't, as a rule, fixate on the ownership of economic resources as history has chosen that for us (are you advocating an alternative system?). Some Libertarians are actually against private ownership altogether (not me)<br><br>Liberty requires an ability to make decisions for oneself. In an economic context (only a part of Libertarian thinking) such freedom is supported by free AND competitive markets. Free markets are typically a feature of capitalist systems. In this context Libertarians, who believe in private ownership (i.e. the right), are generally supportive of capitalist & free market economic systems.<br><br>JC, however, is talking about is the optimal level of government interference in the quasi free market, capitalist economies we have today in countries like the USA or (mine) Australia.<br><br>Libertarians are correct (in an economic context e.g. Austrian school) to talk "about market forces as if they are the laws of physics themselves and can't be bent, broken or ignored altogether" @storm14k. The forces don't change, you can use them to influence the outcomes.<br><br>My understanding of the US Tea Party movement (from a distance) is they believe in smaller government. Their belief is from the position that government expenditure or interference is typically not very efficient. Inefficiencies lead to lower standard of living than could be obtained through more efficient use of resources.<br><br>Examples of government inefficiencies are very easy to find. JC's response is that "smart people" can design effective legislation avoiding such failures. I'm wondering what evidence he has for such belief. The examples (Japanese and Korean massively supported large industries, US education system) provided in his article don't instil much confidence (as admitted in his article).
        Richard Flude
      • So the wise guys start talking again

        Every once in a while you guys come up claiming to be able to regulate the market better than the invisible hand. OK. Let's review what marvelous jobs you pro-regulation folks have done for this nation, shall we? Here we go.<br><br>Fannie Mae: Housing bubble propeller.<br>Social Security: Retirement insecurity.<br>FDIC: Almost collapsed had it not been TARP<br>Federal Reserve: Dollar crasher.<br>Medicaid / Medicare: Tens of trillions dollar unfunded blackholes.<br>SEC: Too busy watching online porn to catch Madoff<br>... ...<br><br>See the problem of know-nothing wise guys is that they are seldom do-nothing-ers, and they keep intervening with the market the same way after each failure to expect a different result - the classic definition of insanity.
        LBiege
      • RE: Net neutrality vs. house republicans (or

        Richard Flude:
        I disagree with your understanding of the Tea Party. Bush damaged the GOP brand so badly that they need a new flag to rally around. Thus the Tea Party, currently being co-opted by the "formal" GOP, at least that is what the GOP is trying to do. We will know in a month if the Tea Party caves and takes up the GOP talking line and the GOP money.
        mswift@...
      • Bush and the neocons

        @mswift<br><i> Bush damaged the GOP brand so badly that they need a new flag to rally around. Thus the Tea Party.</i><br><br>Bush and the neocons were (are) nothing but servants to Israel and Big Oil. They were an eight year blight that subverted the Republican party along with its core values [only don't tell their party cheerleaders over at Fox News, or their Marxist counterparts at MSNBC]. By bankrupting the GOP, they awarded the nation Obama. Now we're all paying the price.<br><br>But Carroll and other one-world liberals don't care to view the Tea Party as anything but the "enemy," regardless of what the platform stands for, or the fact that it began as a <i>grassroots</i> movement. [That must hurt the most.]<br><br>Fact is, they put simple values and ideas into action at the commoners' level, and it resonated. Something egalitarians like Mr. Carroll can only dream about as they push their no-borders stripe of "capitalism" to be everyone's savior. That included a call for overdue reforms from both the GOP and government at large, and a curbing of the growing cancers that are socialism and taxation.
        klumper
      • A whole lot of ignorance in one little spot...

        @LBeige
        Let's address your "points" one at a time...

        Fannie Mae: Housing bubble propeller. Not exactly. Banks deciding to ignore basic lending principles and speculators bidding up housing prices were two other drivers of the housing market bubble. Fannie Mae didn't help anything, but to lay the housing bubble at the feet of Fannie Mae ignores reality.

        Social Security: Retirement insecurity. No. Not even close. Crack open a history book and look at what retirement meant before Social Security. What you'll find is that retirement was something that the ultra-rich had to look forward to. Everyone else either worked until they died, lived with their children or moved into the poor house. The day Social Security became law was the first day in American history where there was retirement security.

        FDIC: Almost collapsed had it not been TARP. You're really confused on this one. The FDIC would have been severely burdened without TARP, but it wasn't in danger of collapsing. A few more banks would have folded, but that probably would have been a better alternative then establishing a "too big to fail" mentality for Wall Street banks.

        Federal Reserve: Dollar crasher. The Fed doesn't always make the best decisions on quantitative easing or setting interest rates. Last I checked, the dollar hadn't crashed. I can't seem to recall a single time that the dollar has crashed since we've had a federal reserve. It has fluctuated up and down like every world currency, but crashed? I call "Chicken Little" on that one.

        Medicaid / Medicare: Tens of trillions dollar unfunded blackholes. Medicare, like social security, has been well funded for decades. The problem is, when there are surpluses the federal government just takes the extra money and spends it elsewhere. This leaves a hole in years where there is no surplus. I liked Al Gore's idea of a federal lockbox. Leave money where it's supposed to be and stop stealing it to pay for other things. Want to fund a war, raise money for it. Want to expand an entitlement program, raise money for it. Don't rob from Peter to pay Paul because it gives the impression that things are unfunded.

        SEC: Too busy watching online porn to catch Madoff. One out of six...nothing to write home about. The SEC, like many regulatory agencies, need watchdogs to make sure they are doing their job. Since the heads of these agencies are political appointees, their focus changes every few years. In my mind, they should be more like federal judges...still political appointees for the most part, but their influence is longer than whoever is in the White House for the next 4-8 years.
        jasonp@...
    • The utopia of the free market.

      @Richard Flude
      You only need the state for protecting private property to create your competitive markets?
      Give an historical example of that. If that was really somewhere the case, in whose benefit was it?
      bezoeker
    • RE: Net neutrality vs. house republicans (or

      Message has been deleted.
      james347
  • Overanalysed

    You assume he believes his own argument, but he's doing what Republican do, attacking on his weakest point.

    So you might feel ripped off that Telco's want to charge you directly for a service, then indirectly by charging MS XBox market which will then pass the cost onto you... and you may feel you're a prisoner to their cartel.

    So he makes the claim about 'freedom', he's protecting your 'freedom'. See it's not about Telcos ripping you off with a double charging regime... no, it's freedom!

    Just as he was when he was lobbying for immunity from prosecution for telcos for the the illegal wiretapping. As I recall he said warrants more about 'protecting terrorists more than protecting Americans'. Again the law is there to protect the American people so he flips it and attacks on that point.

    It's not that he believes that, it's not that his 'freedom' argument needs to be analyzed, he knows he's doing something bad hence the misdirection.
    guihombre
  • I hope the author

    didn't break his arm patting himself on the back for writing this lengthy dissertation. That would be a shame, since it nothing but a pile of horse$hit.
    sackbut
    • RE: Net neutrality vs. house republicans (or

      @sackbut Two whole sentences to call me stupid, and not a single point made in the process. Congratulations.
      John Carroll
      • I am kind of surprised

        @John Carroll
        that you caught on to the fact I was calling you stupid. It doesn't take a lot of bandwidth to make the point. I didn't bother to count the number of characters in your post, but it was much longer than most on ZDNet. However, even if you get paid by the word for your drivel, it is still that, and I didn't need more than two sentences to comment on it.

        Supplying points of fact on a blog like this is a waste of time and energy. I would NEVER get any agreement from you, and you will always have the last word no matter how wrong you are.
        sackbut
      • RE: Net neutrality vs. house republicans (or

        @John Carroll Excuse him. You didn't sound enough like Glen Beck.
        storm14k
      • RE: Net neutrality vs. house republicans (or

        @storm14K - and thank god for that.
        John Carroll
      • RE: Net neutrality vs. house republicans (or

        @John Carroll
        Mr. Sackbut told us a lot about himself. Didn't make a single point.
        JohnVoter
      • RE: Net neutrality vs. house republicans (or

        Message has been deleted
        james347
    • You must be one of those Republicans

      that doesn't understand anything.
      @sackbut
      GoPower