From: Rabid Wombat <wombat@mcfeely.bsfs.org>
Date: Tue, 11 Aug 1998 17:53:51 -0700 (PDT)
To: tzeruch@ceddec.com
Subject: [off topic] Re: I'm from the government, and I'm here to control , your email....
In-Reply-To: <98Aug11.125642edt.43010@brickwall.ceddec.com>
Message-ID: <Pine.BSF.3.91.980809234716.5856A-100000@mcfeely.bsfs.org>
MIME-Version: 1.0
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On Tue, 11 Aug 1998 dontspam-tzeruch@ceddec.com wrote:

> On Sun, 9 Aug 1998, Rabid Wombat wrote:
> 
> > This is how it works in a free-market economy (doh!).
> > 
> > One of the self-appointed/assumed functions of gubbmint is to "fix" this, 
> > by granting some organization a monopoly in return for bearing the costs 
> > of creating infrastructure, as well as spreading the cost of servicing a 
> > (smaller) number of remote customers across a (larger) number of 
> > non-remote customers.
> > 
> > Whether this is a good thing(tm) or a bad thing(tm) depends, as usual, on 
> > which side of the subsidy you are on.
> 
> No, it can still be a bad thing even if I am the beneficiary.  The
> question is whether or not it maximizes efficiency.  A stock market crash
> will benefit the short sellers and owners of puts.  But it will also cause
> a depression, which will still affect the short sellers.

Yes, it can be a bad thing no matter which side you are on. Many 
subsidies are merely re-allocation of wealth, often from the rich to the 
poor. OTOH, some services, although not essential, are important enough 
to warrant a limited, regulated monopoly until sufficent scale has been 
reached to allow a competetive marketplace to be successful.

> There is a cross-subsidy.  The monopoly then pays the government to
> maintain the monopoly indefinately using government force to drive out
> competition.  Being able to legally imprison or shoot competitors is an
> advantage that is hard to overcome. 

Every organism seeks to propogate. It is the responsibility of the people 
to kill the monopoly when it has outlived its usefulness.

> Alaska tends to be cold.  Should heat and other forms of energy be
> subsidized, and roads built to wherever I want to place my cabin?  Arizona
> is dry - should they get subsidized water?

They do. What's your point? That this is unfair? Of course it is. Life is 
unfair. Some of these unfair subsidies by not be equitable in the short 
run, but in the long run, everybody comes out ahead. Others simply 
re-distribute wealth, to no long-term socialo benefit whatsoever. The 
difference between the two comes down to managing resources.

Some enterprises have traditionally been beyond the scale of the private 
sector, although that is really no longer the case. The US flourished due 
to the success of the railroad building in the late 1800's, and this 
success would not have been possible without a great deal of public 
assistance. True, the rich got richer, but in the long run, a more 
competitive marketplace evolved. The common person was, as a result, 
better off (at least from an economic perspective).

Eventually, the highway systems were government-subsidized, and the 
railroads were not. This helped GM and its shareholders to get rich, 
provided a lot of post-WWII manufacturing jobs, and created huge 
traffic problems and suburban sprawl. See post-WWII Los Angles as a 
reference.

> Why is distance different than any other factor.  If I want to live in a
> remote area, I should bear the costs of the remoteness, just as if I want
> to live near a river, I will have to bear the costs of flood control or
> damage from uncontrolled floods.  I don't have to live in a mountain
> cabin, but if I do there will be costs.

The government provides flood insurance for those who continue to build in
flood plains, and those of us who live on high ground continue to
subsidize this. I live on high ground, and peronally feel that providing
flood insurance to an area that washes out every 5-10 years is stupid. 
OTOH, it might be useful to provide such insurance for areas that only
wash out every 40-50 years. Where do you draw the line?  BTW- The
government funds "water-control" projects as well, subsidizing the
delivery of water to rural areas. Distance is just another cost factor,
one that happens to be pertinent to the process of delivering packages. 


> 
> The largest delay for consumer wireless has been government regulation
> itself - not allowing efficient use of bandwidth.  (I think the first cell
> phone was 1979).  And there was a CB craze, although it had limited range.
> The big wait was for the FCC to catch up with technology (or for congress 
> to allow them to do so).

This was only partially due to frequency regulation. Miniturization has 
had a lot to do with the recent growth in wireless as well. Back when 
cellular phones were the size of a small purse, they were slow to catch 
on; people who spent a good deal of time in their cars, or those whose 
employers subsidised status symbols had car phones, but growth was still 
fairly slow. Once the hand-helds appeared, growth accelerated. There had 
to be enough consumers to support the cost of adding infrastructure, and 
there had to be enough infrastructure to support the consumer; some 
industries can pull this off without outside help, and some cannot.

BTW - Australian cattle stations used radios as their primary link to the 
outside world for quite a while, due to their rural location; the same 
held true for many other "remote" corners of the globe. Not a very 
scalable solution, though. Try using a CB in a built-up area. Then 
imagine everyone getting home on Thursday after a long day at work, and 
trying to order pizza delivery at the same time on a CB in that same area.


> 
> > Before you argue "the best government is no government", visit a few 
> > third-world capitols, and note how you move from a modern capitol city to 
> > flintstones-like living in about 50km.
> 
> Many third world governments are thoroughly corrupt.  Across the border in
> Mexico they have "Government" - are you saying that Mexico City is better
> than Wyoming?  And the small villages have government even if they don't
> have technology.

My point is that many areas of the world have not invested in deploying
technology very far beynd the boundaries of a few "modern" cities. 
Without getting into an even longer rant here, the end result is to
perpetuate the cycle of rural poverty (look into some of the studies of
third-world economic development - distribution of technology and services
is often cited as a critical success factor). Those who do escape to the
city and manage to attain a higher socio-economic status remain there. The
bulk of those born to poverty have no hope of climbing out of it. 

In many countries, (including Mexico, since you mentioned it), delivering
telephone service to rural areas without wireless technology was not even
possible; the locals pull down the telephone (and power) wires to steal
the copper for re-sale. 

Basically, some groups just haven't managed to pull off effective 
self-government; in the long run, you get the form of government you deserve.
If you are too damn self-interested to see anything in terms of the 
common good, you'll probably end up with a self-interested government. 
Call it corrupt if you wish to, for it is, but don't confuse cause and 
effect.

> 
> > A $.32 price on first-class mail to anywhere in the country is a good 
> > deal for all. OTOH, package delivery has become sufficiently competitive, 
> > and probably needs to be revamped.
> 
> Generally wealthier people can afford to live in the remote areas, and can
> afford alternatives to first class mail.  Poor people rely on first class
> mail within cities to do much of their business, and that is mainly local. 
> So you have another case of the poor subsidizing the rich. 

I'm not sure where you've been, but not everybody who lives in a rural 
area is wealthy; this only occurs in places where space is at a premium, 
and only the wealthy can afford to purchase space. There are plenty of 
rural people who are dependant on first class postage to pay their bills, 
and they can't simply walk over to the corner grocer/food stamp 
launderer/check cashing/utlity bill collector to take care of business 
the way they can down on da block.

> 
> > Just my $.02.
> 
> No, your $0.32, soon to be more.
> 

At twice that, it is still a bargain, when you consider what you're 
getting for your money.

Actually, a good portion of the costs of first class delivery are 
subsidized by commercial bulk mailers, who are in turn supported by those 
who purchase goods and services found in direct mail advertisements. I 
suppose that you could even draw the conclusion that if one can afford to 
purchase goods, one is better off that one who cannot, and therefore the 
"haves", by subsidizing bulk mail, are bearing a share of the cost of 
first class delivery used by the "have nots."

Of course, we could argue economics for months - if you don't like the 
results, just change the assumptions.

-r.w.