"Geithner's Revelation" – The Wall Street Journal – May 12, 2009 – A terrific editorial echoingmy post on the first public official to concede the crucial role easy monetary policy played in the crash.
Later this week the FCC will accept the first round of comments in its “Open Internet” rule making, commonly known as Net Neutrality. Never mind that the Internet is already open and it was never strictly neutral. Openness and neutrality are two appealing buzzwords that serve as the basis for potentially far reaching new regulation of our most dynamic economic and cultural sector — the Internet.
In Monday’s Wall Street Journal, I address the once-again raging topic of “net neutrality” regulation of the Web. On September 21, new FCC chair Julius Genachowski proposed more formal neutrality regulations. Then on September 25, AT&T accused Google of violating the very neutrality rules the search company has sought for others. The gist of the complaint was that the new Google Voice service does not connect all phone calls the way other phone companies are required to do. Not an earthshaking matter in itself, but a good example of the perils of neutrality regulation. Continue reading this entry »
Today, FCC chairman Julius Genachowski proposed new regulations on communications networks. We were among the very first opponents of these so-called “net neutrality” rules when they were first proposed in concept back in 2004. Here are a number of our relevant articles over the past few years:
With an agreement between the U.S. Department of Commerce and ICANN (the nonprofit Internet Corp. for Assigned Names and Numbers, headquartered in California) expiring on September 30, global bureaucrats salivate. As I write today in Forbes, they like to criticize ICANN leadership — hoping to gain political control — but too often ignore the huge success of the private-sector-led system.
How has the world fared under the existing model?
In the 10 years of the Commerce-ICANN relationship, Web users around the globe have grown from 300 million to almost 2 billion. World Internet traffic blossomed from around 10 million gigabytes per month to almost 10billion, a near 1,000-fold leap. As the world economy grew by approximately 50%, Internet traffic grew by 100,000%. Under this decade of private sector leadership, moreover, the number of Internet users in North America grew around 150% while the number of users in the rest of the world grew almost 600%. World growth outpaced U.S. growth.
Can we really digest this historic shift? In this brief period, the portion of the globe’s population that communicates electronically will go from negligible to almost total. From a time when even the elite accessed relative spoonfuls of content, to a time in the near future when the masses will access all recorded information.
These advances do not manifest a crisis of Internet governance.
As for a real crisis? See what happens when politicians take the Internet away from the engineers who, in a necessarily cooperative fashion, make the whole thing work. Criticism of mild U.S. government oversight of ICANN is hardly reason to invite micromanagement by an additional 190 governments.
There are two key mistakes in the public policy arena that we don’t talk enough about. They are two apparently opposite sides of the same fallacious coin.
Call the first fallacy “innovation blindness.” In this case, policy makers can’t see the way new technologies or ideas might affect, say, the future cost of health care, or the environment. The result is a narrow focus on today’s problems rather than tomorrow’s opportunities. The orientation toward the problem often exacerbates it by closing off innovations that could transcend the issue altogether.
The second fallacy is “innovation assumption.” Here, the mistake is taking innovation for granted. Assume the new technology will come along even if we block experimentation. Assume the entrepreneur will start the new business, build the new facility, launch the new product, or hire new people even if we make it impossibly expensive or risky for her to do so. Assume the other guy’s business is a utility while you are the one innovating, so he should give you his product at cost — or for free — while you need profits to reinvest and grow.
Reversing these two mistakes yields the more fruitful path. We should base policy on the likely scenario of future innovation and growth. But then we have to actually allow and encourage the innovation to occur.
Stanford economist Paul Romer has had lots of good ideas over the years. Particularly his ideas about the importance of ideas in the economy. But his “Charter City” idea explored at the recent TED conference is one of the best yet.
Romer uses China’s “free zones” envisioned by Deng Xiaoping and initially implemented by one Jiang Zemin as the chief example of how his charter cities would work in practice. He explains how they might cut the political-economic Gordian knot of societies too stuck in the past to make obviously needed rule changes that can open the floodgates of ideas and entrepreneurship. These were the key themes of my paper.
Also check out this working paper by Romer that surveys the economic growth literature (hat tip: Growthology).
Later this week the FCC will accept the first round of comments in its “Open Internet” rule making, commonly known as Net Neutrality. Never mind that the Internet is already open and it was never strictly neutral. Openness and neutrality are two appealing buzzwords that serve as the basis for potentially far reaching new regulation of our most dynamic economic and cultural sector — the Internet.