No, I'm not attempting to link those two subjects, although it can be done. I'm pointing out that I have an entry on the latest developments in Europe's attempts to regulate online media on the PFF blog, and an entry on diminishing prospects for free trade on the IPcentral blog.
Alfred Kahn wrote the book -- literally -- on regulation. The author of The Economics of Regulation led the deregulation of the airline and trucking industries under President Carter, and anyone who has purchased a good shipped at some point on a truck or flown on a commercial airplane since that time owes Dr. Kahn a debt of gratitude.
So it was an honor when I saw Dr. Kahn had posted a lengthy comment on net neutrality to a blog entry I had posted on the PFF blog. I persuaded Dr. Kahn to let PFF publish a revised version of the comment as a Progress Snapshot and he agreed, so today we published "A Democratic Voice of Caution on Network Neutrality." It's a brilliant read. It also reaffirms my longstanding contention that tech policy need not be partisan.
Kara Rowland of The Washington Times has a comprehensive look at the Television Without Frontiers initiative in the European Union, a new directive that would extend old media rules to new media such as the Internet. You can see some of my writings on this in the bar on the lower left of this blog. Of course, one reason I like this story is that I was quoted extensively.
No, F.A. Hayek never addressed net neutrality in his writings; I can't find it in the index of my copy of The Road to Serfdom (it jumps from "Naumann, Friedrich, Mitteleuropa," to "New Deal"). But in an op-ed that Brainwash was kind enough to post today, I play What-Would-Hayek-Do (WWHD) in looking at net neutrality. In so doing I examine his Nobel acceptance speech, "The Pretense of Knowledge," and echo Hayek's caution against unintented consequences resulting from public policy actions. Here's Hayek:
To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority.
There's little to no evidence of market abuse in the net neutrality debate. Yet proponents of legislation say abuses are due any day now, and we must act prophylactically to prevent them through the creation of new regulations. WWHD? I think he'd say to slow down, lest action result in something worse than inaction.
From the PFF blog:
I had the pleasure last evening of speaking at an America's Future Foundation event titled "Should the Government Regulate the Net?" AFF consists of conservatives or libertarians in their 20s and 30s; in just over a year I'll turn 40 and I suppose will join America's Past. But I enjoyed the AFF crowd, which filled to standing-room a banquet room in the Rayburn House Office Building. I particularly enjoyed their probing questions. In my prepared remarks I sought to address some of the hysteria surrounding the net neutrality debate, and in so doing evoked the possibility of a mutant snakehead rising out of the Potomac River, walking down the Mall and devouring the US Capitol. That, I suspect, isn't likely to happen, but neither are the scary stories we often hear, as was made clear by a fellow panelist, Heritage's James Gattuso.
The other panelists, Alex Curtis of Public Knowledge and Frannie Wellings of Free Press, were far more restrained than much of the rhetoric coming from their organizations and the coalitions they've helped to form. For example, in arguing that no broadband ISP is likely to get away with discriminatory behavior for long, I pointed out the example of Cox Communications. Some of its customers said they were having trouble accessing Craig's List, and cried foul on blogs, suggesting all sorts of conspiracy theories. Cox says their security provider was having difficulty with the way Craig's List data arrived for Cox customers, and the companies are addressing the problem. That seems to me an example of the effectiveness of the blogosphere in keeping corporations in check, either if the behavior is intentionally egregious or in this case, in what appears to be a technical snafu.
But the Save the Internet coalition, whose web site is run by Free Press, has on its home page today, at the very top, a box titled "The Latest... Net Neutrality in Disguise." The blog entry that links to does actually point out Cox's explanation, but dismisses it and insists this was part of a diabolical plot by Cox. If it was, it wasn't a very effective one. And if every time someone employed with a corporation says (X) we are supposed to trust bloggers and believe the individual really said (-X), it's hard to imagine any constructive legislative approach other than to eliminate corporations entirely. I suspect Google, Microsoft and Yahoo!, pushing for net neutrality legislation, wouldn't go that far.
Fortunately the AFF audience wasn't inclined toward paranoia or hyperbole. They asked tough questions. They want a "free" Internet. But I believe all four of the panelists last night, and of course moderator Jerry Brito of Mercatus, want a "free" Internet, in the sense that we want to be able to access the content of our choice. Former FCC Chairman Michael Powell already put that forward as one of the Commission's Four Principles on net nuetrality, and the Commission has put those principles into action (see PFF's primer on net neutrality for more information).
The best question came at the end. The questioner noted that Alex and Frannie kept talking about the alleged evils of duopoly. What if there was more competition? Would they still support legislation? Alex proposed a sunset, with regulations leaving if there were, say, 5 competitors. The questioner tried to ask a follow-up, asking if placing the rules on ISPs to begin with wouldn't in fact retard the entry of new competitors. Jerry was trying to wrap up and cut him off, but I answered him anyway in the affirmative. I also warned against government trying to dictate how many competitors should be in a market, something markets should decide. I noted Reed Hundt tried to do that with spectrum auctions in the 1990s in an effort to create at least 6 national providers and numerous local ones, and the result was numerous companies overbid for spectrum and went bankrupt, and in at least one case a multibillion-dollar law suit entailed. The national wireless market has decreased to four but still seems hypercompetitive. But James had the best line, and appropriately it closed the event. He cautioned the audience of mostly Hill staff, "I'd be very careful when passing so-called temporary legislation," noting the telephone excise tax just came to an end after being initiated to fund the Spanish-American War. That line got a roar of approval.
Ever the cynic, I had to remind James after the event that as it was just a Treasury Department decision, the excise tax still could come back, as Congress hasn't formally repealed it. He agreed, further evidence of the danger of "temporary" legislation.
Tomorrow evening I am participating in a panel discussion on net neutrality hosted by America's Future Foundation. Other speakers include Heritage's James Gattuso, Public Knowledge's Alex Curtis, Free Press' Frannie Wellings and Mercatus' Jerry Brito. This event will take place on Capitol Hill, in the Rayburn House Office Building, Room B-338. Drinks start at 6:30 p.m.; panel begins at 7 p.m. AFF Roundtables are free for members, $5 for non-members. I'll blog about the event afterward.
For a sneak preview of my thoughts on the push for net neutrality regulations, read my most recent PFF blog on the subject here.
You can't pick up a newspaper nowadays without seeing ads for or against net neutrality legislation. Both sides are being a bit extremist in their arguments, and the truth is being lost. However, as the blog post above will indicate, I think the bulk of the rhetorical bombast is coming from proponents of legislation, but that is to be expected because it is not an easy task to get Congress to regulate an industry when there is no concrete evidence of a need to do so.
You find inspiration for writing in the oddest places.
I spent most of the day chaperoning my daughter's class on a field trip to a Virginia plantation, Woodlawn. Kids need to run and play after minding their manners on a house tour, so the guide took the kids out on the front lawn and gave them 18th century toys. One game was called 9-pin, basically bowling minus one pin. The guide said that people liked to gamble on 9-pin matches, so the government (she didn't say which) banned gambling on 9-pin games. The gamblers then added a tenth pin (giving us today's bowling) so they could keep gambling.
I want to research this anecdote, and if it's true, it's yet another example of the dangers of regulation. Controlling behavior through laws is like putting a cap on a tube of toothpaste. If there's no pressure the toothpaste will stay in, but if you squeeze it will come out the other end. That doesn't mean government doesn't have an obligation to set laws and enforce them, but laws governing popular behavior (see Prohibition) are quite tricky indeed.
Growing up in the Arizona desert, I was always aware of this nebulous Washington, D.C., micromanaging my life through laws and regulations, and ever since I've been a libertarian at heart, even if I recognize that pure libertarianism is entirely impractical. But I've always wondered why so many in government have such faith in the government's ability to solve problems, when nothing in the track record suggests that it can.
Well, I purchased a bunch of used books at a sale put on by my kids' school the other day, and one is called A Primer for Policy Analysis by Edith Stokey and Richard Zeckhauser. The copyright date is 1978. At the time, Stokey and Zeckhauser were both with the John F. Kennedy School of Government at Harvard University. This was the introductory textbook for students being trained to go into government and make law. I haven't read the book through yet, but what's fun is to flip through the pages very quickly. No, there's no stick figure action drama of a man tripping on a banana peel. Instead, there is page after page of graphs, flow charts and algebraic equations. There even appears to be some calculus in there.
I've worked on Capitol Hill and I've been involved in public policy in one way or another for almost two decades. Public policy is many things (a tool for favoritism, an easy capture for rentseekers, a method to advance partisan interests) but it is not a science. Not even close. Any figures one would put in those formulas, any numbers used to generate those graphs, are by definition subjective because their selection and inclusion is colored by the political persuasion and desired agenda of the calculator.
Public policy isn't a bad thing, even though it can go bad quite often. But the folks who were reading this book at Harvard in 1978 are in senior positions in government now. They've been taught that their job is a science, like particle physics. Thus, when they sit down to write a new law and start drawing pretty flow charts, they have every reason to believe that they will achieve consistent, predictable results, just as one does in a real science. Of course they won't. But that is the problem -- they think they will, so they act.
I pray that they're not still using textbooks like this at the Kennedy school today, but somehow I suspect they are.
