What happens when a free market libertarian meets the real world?

ivory towerby twak

Four signs America’s broadband policy is failing
[Via Ars Technica]

In 2008, I wrote a paper for the Cato Institute questioning the need for network neutrality regulations; I argued that the Internet’s decentralized architecture made it inherently resistant to mischief by broadband incumbents. While I’m still skeptical about the wisdom of network neutrality regulations, I’ve become more concerned about the state of the broadband market in the four years since writing that paper. In a March article for National Affairs, I made a case for regulatory action to prevent further consolidation of the largest broadband firms.

What changed my thinking was less the theoretical arguments set out in that piece than it was a sequence of developments in the telecom marketplace. It forced me to reexamine my own assumptions about the state of the broadband market. Here are the four most important.

The Berkman broadband report

Telecom policy wonks have held a long-running debate about how the United States stacks up against other nations when it comes to Internet access. In 2009, a team led by Yochai Benkler at Harvard’s Berkman Center produced a voluminous report on the subject which found that broadband service in the United States was distinctly mediocre.

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Nice to see him change his mind when he moves out of the white tower of the Cato Institute and white papers into what is actually happening. Funny how the real market so seldom operates in the  hypothetical manner espoused by most libertarians.

Many libertarians retreat further into the Cargo Cult world they have created rather than admit a mistake and recognize the real world operates quite differently that their imagined one.

The US is falling further and further behind other countries in its networks. Because there are really very little market forces to make this happen here. Pursuing this course has not helped us compared to the rest of the world.

Cable and telecomes are perfectly willing to cede large swaths of America to the other. That way they can save money by not having to build out their network and actually compete. They can keep the prices high in the areas they serve, control data in ways to get around net neutrality and make a bundle. Why expand into competitive markets?

And there does not seem to be a competing technology on the way that can compete with both cable or the telecoms. Until there is, each will be happy with its fiefdom of customers to gut.

2 thoughts on “What happens when a free market libertarian meets the real world?

  1. I would enjoy an honest discussion with you on this topic.

    In the end:
    A) anarchists and libertarians are not the same thing.
    B) the market cannot survive corporatism. The state causes corporatism. The market cannot solve it.
    C) Neutrality is a form of redistribution from large institutions to consumers. If we regulate it, then we will increase corporatism and decrease redistribution.

    Curt

    1. As far as any human can be honest in their discussions, I will try ;-) Here are some of my thoughts.

      The goals of anarchists and libertarians are not the same but I do think that they often follow similar processes – the need for purity in order to sustain their models.

      And both seem to operate on pre-conceived models of the world around them, rather than derive from observations of the real world. Thus why I liked this article on Ars so much as it demonstrated the realization of the author that his model simply failed in the real world.The world is more complex than his original simple model.

      I think both use simplified models of the world around us and often try to operate from intellectual first principles rather than observe the complexity of real world. Purity is often more important than pragmatism. (And not to pick on either. Purity in this way exists throughout human communities.) I feel the strength of our markets come from the diversity of human drives and needs, not from everyone acting with the same drives. Believing that all people will act the same way given the same incentives is simply not true in the real world. It is the fact that we act differently that matters, not that we have a purity that makes us all act the same.

      A reversal: the state cannot survive corporatism. The market causes corporatism. The state cannot solve it. Corporatism seems to be a combination of several trends, all of which could be fixed in a functioning Republic which I hope we still have. Money is what drives corporatism. Money corrupts the political process and, in many ways, also distorts the markets. We now have a bigger part of our economy focussed on making money than on making things for the market. Throughout our country’s history, every time this has happened, corporatism has flourished. Every time the financial arena has been brought under better control, corporatism has decreased.

      Not exactly sure which sort of neutrality you are talking about. Nor what you mean by redistribution. Adam Smith is, with Darwin, one of the great intellects of the last 300 years. The free markets he tried to model work much better than anything else. But he also postulated that they would be run by humans with specific morals and ethics. He described this in his book “The Theory of Moral Sentiments.”

      He did not postulate that every one would do what is selfishly best for them but that people will do things that provide them greater happiness, pleasure, etc. For some people that is making a lot more money or doing something selfish just for themselves but for others, it may be helping other communities. For some, money is the ultimate end. For others, money is simply a means to an end. Smith recognized that these drives, plus many other things, motivated human behavior and described moral behavior. He understood the complexity of human behavior.

      Anarchists and libertarians seem to act as though only their views are right and that their behavior is the only logical one to take. Anarchists and libertarians seem to act as though their morality encompasses all of human and market behavior. I am not convinced.

      I am a pragmatist and tend to feel that the greatest diversity of view, drives, etc. provides the best chance to be adaptive and resilient. Dogma and ideology can more often produce problems than solve them.

      Sometimes the markets work best. Sometimes they do not. Sometimes government intervention is needed. Sometimes it is not. The world is a wonderfully, messy complex place and putting all our eggs into one sort of behavior for all circumstances (or even most of them) does not make sense.

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