From: "Perry E. Metzger" <pmetzger@lehman.com>
Date: Thu, 11 Nov 93 08:24:11 PST
To: Mike Godwin <mnemonic@eff.org>
Subject: Re: Should we oppose the Data Superhighway/NII?
In-Reply-To: <199311111535.AA02116@eff.org>
Message-ID: <9311111622.AA28106@snark.lehman.com>
MIME-Version: 1.0
Content-Type: text/plain



Mike Godwin says:
> It's not that simple, unfortunately. Once monopolies have been created
> with government support, removing government intervention doesn't 
> automatically make competition happen.
> 
> Compare it to strip-mining: once a strip mine has dug up the landscape,
> the mere decision to stop mining doesn't automatically restore the land to
> the status quo ante, or even to an environment in which any kind of
> ecosystem can flourish.

However, its not like strip mining. So long as regulations are in
place, the market is not functioning in a maximally efficient manner,
and further distortions are occuring.

Many modern economists, from Public Choice school to Austrian school,
would hold that any attempt by the government to "fix" what it has
done axiomatically are further distortions of the market, and that the
market will settle most rapidly into a properly functioning state if
government control is removed as quickly and thoroughly as possible.

Theory in fact matches practice. Observe, for example, the difference
between places like Hungary (we will be kind and not use Russia as an
example) in which gradualist government guided conversions to the
market are practiced, versus Poland, where a radical "shock therapy"
liberalization occured. Poland was the only nation in Eastern Europe
to experience economic growth following the inception of its program,
its inflation rate is down to acceptable levels, and over half the
country's workers are now in the private sector.

I understand the impulse to use metaphors like strip-mining, but
metaphors are a way of explaining theory, not a way to reason. I
could, for example, analogise the infrastructure to a car, which is
zooming along fine now but might run out of gas without fueling.
However, this metaphor is inapplicable -- it has nothing to do with the
situation.

Concretely observed, there is no obstacle to the sort of national
network we want other than the government. In spite of the belief that
"monopolists" will take over, there is no evidence that competition is
slowing down (in fact, it is speeding up as fast as the government
will allow it to) and in spite of the belief that the network will
"control programming and work only one way" the truth seems to be that
the cable companies and everyone else want to get into digital two-way
services as soon as possible and that the government is all that is
standing in the way.

Perry