Explaining economics of Internet neutrality seems largely futile, here we are not tackling a coherent argument, but more or less a form of inherent insecurity. It’s a curious obsession with outcomes, without any deep engagement with the underlying market principles which actually results in those very beneficial outcomes. In this infatuation with neutrality we are ending up employing one of the least effective means known in social sciences — regulatory force. Common sense dictates that outcomes depend on the employed methods, not intentions.
The most infamous “walled gardens” the policy wonks and digital content entrepreneurs want to prevent has not even materialized. Seems like they have a crystal ball to predict the future. And Free Basics seems to be the one colossus which will open the floodgates to the internet of walled gardens. A wise sage residing in Palo Alto once made a comment about global warming extrapolations employed by fanatics: “Runaway extrapolations are the last refuge of hysteria mongers….The temperature has risen about 10 degrees since this morning. If you extrapolate that, we will all be burned to a crisp before the end of the month”. Facebook’s Free Basics also managed to invoke such an emotive response.
Lobbying to ban a free product reflects the depth of the paranoia. Ironically, proponents of neutrality include internet entrepreneurs also, they have naively embraced regulatory oversight which has a proven track record of destroying productivity. In the efforts to avoid the mythical walled gardens, they have now embraced regulatory swamps. The neutrality response is also indicative of a larger skepticism towards markets. Here, content providers and entrepreneurs are deeply suspicious of ISPs, but strangely simple minded towards a centralized bureaucracy.
Interestingly, those who support regulatory force are not only market entrepreneurs, but they are also mostly from well qualified backgrounds. The conviction with which these individuals have decided what’s good for others is worth noting. They are fully convinced about their own qualifications to determine social outcomes within a complex area. A field which at least mandates specialized understanding of network engineering, economics and political science. No semblance of humility or respect whatsoever towards the scale of their undertaking.
José Ortega y Gasset stated this phenomenon as the “Barbarism of “Specialization””. Individuals who are experts in their own fields tend to also exhibit forceful opinions in other areas where they possess little or no understanding. The paradox is that these specialists who are forcing their own conclusions on others, is in reality disallowing infrastructure managers the autonomy to fully utilize their own specialized knowledge. And consumers the freedom to pick their own preferred product based on their specialized needs.
“For, previously, men could be divided simply into the learned and the ignorant, those more or less the one, and those more or less the other. But your specialist cannot be brought in under either of these two categories. He is not learned, for he is formally ignorant of all that does not enter into his speciality; but neither is he ignorant, because he is “a scientist,” and “knows” very well his own tiny portion of the universe. We shall have to say that he is a learned ignoramus, which is a very serious matter, as it implies that he is a person who is ignorant, not in the fashion of the ignorant man, but with all the petulance of one who is learned in his own special line.
And such in fact is the behavior of the specialist. In politics, in art, in social usages, in the other sciences, he will adopt the attitude of primitive, ignorant man; but he will adopt them forcefully and with self-sufficiency, and will not admit of — this is the paradox — specialists in those matters. By specializing him, civilization has made him hermetic and self-satisfied within his limitations; but this very inner feeling of dominance and worth will induce him to wish to predominate outside his speciality.” — José Ortega y Gasset
Finally, the most cited reason for this paranoia of an impending ISP domination seems to be that of spectrum scarcity. Actually, scarcity of a resource indicates that it should be privatized. Market is a system which exists to figure out the most productive employment of scarce resources. Material prosperity is the testament for its efficiency. A scarce resource does not simply become abundant because of regulatory decrees, only a functional market can accomplish that. Market is also eventually a process, which evolves based on entrepreneurs diverting private property based on price signals. Legal mandates dismantle the very incentive which drives this beneficial process.
Hence, how to productively employ spectrum depends on the information communicated by prices. A rising spectrum price simply indicates that the entrepreneurs need to divert more R&D towards development of better analog and digital signal communication. Which would eventually bring down prices and also increase bandwidth productivity. In other words, prices are integral for conveying critical dispersed information. Regulatory oversight is the easiest way to distort prices and competition. We cannot expect market growth by constantly ignoring the underlying mechanisms. Effects depend on the existence of the corresponding causal processes.
All planned economies suffer from material scarcity, which unfortunately fosters a certain amount of insecurity and hence begets even more protectionism. Quite a vicious cycle to be trapped in. But here, even the most educated sections of the society has vociferously advocated protectionism. This probably also alludes to the larger reason why no political party is even talking about real structural reforms. Evidently, we are overwhelmingly in favor of large intrusive administrative state.
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