Internet Companies’ Bogus Plea for Regulation
Some of the most prominent Internet companies sent a letter yesterday asking for protection from market forces. Among them: Facebook, Google, Amazon, and Twitter.
A Washington Post story summarizes their concerns: “[W]ithout a strong anti-discrimination policy, companies like theirs may not get a fair shot on the Internet because carriers could decide to block them from ever reaching consumers.”
No ISP could block access to these popular services and survive, of course. What they could do is try to charge the most popular services a higher tariff to get their services through. Thus, weep the helpless, multi-billion-dollar Internet behemoths, we need a “fair shot”!
Plain and simple, these companies want regulation to ensure that ISPs can’t capture a larger share of the profits that the Internet generates. They want it all for themselves. Phrased another way, the goal is to create a subsidy for content creators by blocking ISPs from getting a piece of the action.
It’s all very reminiscent of disputes between coal mines and railroads. The coal mines “produced the coal” and believed that the profitability of the coal-energy ecosystem should accrue only to themselves, with railroads earning the barest minimum. But where is it written that digging coal out of the ground is what creates the value, and getting it where it’s used creates none? Transport may be as valuable as “production” of both commodities and content. The market should decide, not the industry with the best lobbyists.
What happens if ISPs can’t capture the value of providing transport? Of course, less investment flows to transport and we have less of it. Consumers will have to pay more of their dollars out of pocket for broadband, while Facebook’s boy CEO draws an excessive salary from atop a pile of overpriced stock holdings. The irony is thick when opponents of high executive compensation support “net neutrality” regulation.
Another reason why these Internet companies’ concerns are bogus is their size and popularity. They have a direct line to consumers and more than enough capability to convince consumers that any given ISP is wrongly degrading access to their services. As Tim Lee pointed out in his excellent paper, “The Durable Internet,” ownership of a network service does not equate to control. ISPs can be quickly reined in by the public, as has already happened.
A “net neutrality” subsidy for small start-up services is also unnecessary: They have no profits to share with ISPs. What about mid-size services—heading to profitability, but not there yet? Can ISPs choke them off? Absolutely not.
Large, established companies are not known for being ahead of trends, for one thing, and the anti-authoritarian culture of the Internet is the perfect place to play “beleaguered upstart” against the giant, evil ISP. There could be no greater PR gift than for a small service to have access to it degraded by an ISP.
The Internet companies’ plea for regulation is bogus, and these companies are losing their way. The leadership of these companies should fire their government relations staffs, disband their contrived advocacy organization, and get back to innovating and competing.
Cato Health Care Experts Live-Blogging Obama’s Address
Cato health care policy experts offered live-commentary to President Obama’s address to Congress on Wednesday night. To review their comments, click the replay button below.
The video player has the speech in full.
Visit msnbc.com for Breaking News, World News, and News about the Economy
Using Twitter to Confront an Anti-Semitic Attack in Chile’s Paper of Record
After a morning workout and attending Mass this Sunday, I read El Mercurio (Chile’s paper of record) online. Although I seldom read Chilean newspapers blogs (too many attacks and too much dirt), I did so that morning because I was impressed by the indignation expressed by my friend Luis Larraín in his Sunday blog (titled “Canallas” – Shameless). I had named Larraín Superintendent of Social Security when he was 25 years old. At that time I was 30 and Secretary of Labor and Social Security.
With astonishment I discovered that a certain “Mr. Murillo”, in the comment number 10 on the blog (which I copied immediately, and backed up electronically), explicitly attacked another commenter, Mr. José Fregoso Edelstein, by saying that his previous comment was due to the fact that he is from a “bad race” because he is Jewish.
I immediately logged in to Twitter and posted a ‘tweet’ demanding El Mercurio delete the blog comment, because it is a terrible insult directed at a group of people that have suffered indescribable horrors, not only in the 20th Century, but throughout history. I would have done the same thing if the insult was directed at Palestinians, Lebanese, Croatians, or any other racial/religious/national group.
However, I found an unexpected surprise. Instead of receiving immediate support for an action I thought just and reasonable, several people on Twitter attacked Jews, and me for defending them (one wrote, “You have used your enormous prestige in Chile to become “a shield for the Jews”). They also accused me of “encouraging censorship”, suggesting a “media dictatorship”, etc. . . . I replied inmediately in Twitter to the least offensive ones. Fifteen minutes later I received a ‘tweet’ from an editor at El Mercurio, saying that they had seen my complaint in Twitter and that they were studying the situation. With another tweet I insisted on immediate deletion of the comment. Twenty minutes later the newspaper editors deleted the offensive comment number 10. I want to emphasize that the editorial mistake, even this grievous one, does not compromise the newspaper El Mercurio as a whole, and its fast action in regard to the issue speaks to the newspaper’s chief editor’s integrity. It was an extraordinary triumph of the fast boat Twitter over the “media carrier” in Chile, another demonstration of the liberating potential of the wonderful new technologies being developed in the land of the free and the brave.
What left me very worried, and the reason I wrote this, is having detected a worrisome anti-Semitic sentiment among my fellow countrymen. Is this unjust anti-Semitic sentiment widespread, though hidden, in Chile, or was this only a “black swan?” I declare myself in a state of alert. We are building a free and good country. There should be no place whatsoever for the language of hate and the discrimination of minorities. As the great Albert Einstein said: “The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing.”
Filed under: General; Telecom, Internet & Information Policy
Twitter and Iran – It’s Not About the U.S. Government
It’s fascinating to watch developments in Iran via Twitter and other social media. (Notably, when I turned on the TV last night to look for Iran news from a conventional source, there was nothing to be found – just commercials and talking heads yapping about politics.)
It was laudable that Twitter delayed a scheduled outage to late-night Tehran time in order to preserve the platform for Iranian users, but contrary to a growing belief, it wasn’t done at the behest of the State Department. It was done at the behest of Twitter users.
Twitter makes that fairly (though imperfectly) clear on its blog, saying, “the State Department does not have access to our decision making process.”
As Justin Logan notes, events in Iran are not about the United States or U.S. policy. They should not be, or appear to be, directed or aided from Washington, D.C. Any shifts in power in Iran should be produced in Iran for Iranians, with support from the people of the world – not from any outside government.
People are free to speculate that the State Department asked Twitter to deny its involvement precisely to create the necessary appearances, but without good evidence of it, assuming so just reflects a pre-commitment that governments – not people and the businesses that serve them – are the primary forces for good in the world.
Filed under: Foreign Policy and National Security; Telecom, Internet & Information Policy
Breaking through the Great Firewall of China
So when China blocked social networking sites for the 20th anniversary of the Tiananmen square massacre, were they successful?
Week in Review: A Speech in Cairo, an Anniversary in China and a U.S. Bankruptcy
Obama Speaks to the Muslim World
In Cairo on Thursday, President Obama asked for a “new beginning between the United States and Muslims around the world,” and spoke at some length on the Israeli-Palestinian conflict, Iran, Iraq, and Afghanistan. Cato scholar Christopher Preble comments, “At times, it sounded like a state of the union address, with a litany of promises intended to appeal to particular interest groups. …That said, I thought the president hit the essential points without overpromising.”
Preble goes on to say:
He did not ignore that which divides the United States from the world at large, and many Muslims in particular, nor was he afraid to address squarely the lies and distortions — including the implication that 9/11 never happened, or was not the product of al Qaeda — that have made the situation worse than it should be. He stressed the common interests that should draw people to support U.S. policies rather than oppose them: these include our opposition to the use of violence against innocents; our support for democracy and self-government; and our hostility toward racial, ethnic or religious intolerance. All good.
David Boaz contends that there are a number of other nations the president could have chosen to deliver his address:
Americans forget that the Muslim world and the Arab world are not synonymous. In fact, only 15 to 20 percent of Muslims live in Arab countries, barely more than the number in Indonesia alone and far fewer than the number in the Indian subcontinent. It seems to me that Obama would be better off delivering his message to the Muslim world somewhere closer to where most Muslims live. Perhaps even in his own childhood home of Indonesia.
Not only are there more Muslims in Asia than in the Middle East, the Muslim countries of south and southeast Asia have done a better job of integrating Islam and modern democratic capitalism…. Egypt is a fine place for a speech on the Arab-Israeli conflict. But in Indonesia, Malaysia, India, or Pakistan he could give a speech on America and the Muslim world surrounded by rival political leaders in a democratic country and by internationally recognized business leaders. It would be good for the president to draw attention to this more moderate version of Islam.
Tiananmen Square: 20 Years Later
It has been 20 years since the tragic deaths of pro-democracy protesters in Tiananmen Square in June 1989, and 30 years since Deng Xiaoping embarked on economic reform in China. Cato scholar James A. Dorn comments, “After 20 years China has made substantial economic progress, but the ghosts of Tiananmen are restless and will continue to be so until the Goddess of Liberty is restored.”
In Thursday’s Cato Daily Podcast, Dorn discusses the perception of human rights in China since the Tiananmen Square massacre, saying that many young people are beginning to accept the existence of human rights independent of the state.
A few days before the anniversary, social media Web sites like Twitter and YouTube were blocked in China. Cato scholar Jim Harper says that it’s going to take a lot more than tanks to shut down the message of freedom in today’s online world:
In 1989, when a nascent pro-democracy movement wanted to communicate its vitality and prepare to take on the state, meeting en masse was vital. But that made it fairly easy for the CCP to roll in and crush the dream of democracy.
Twenty years later, the Internet is the place where mass movements for liberty can take root. While the CCP is attempting to use the electronic equivalent of an armored division to prevent change, reform today is a question of when, not if. Shutting down open dialogue will only slow the democratic transition to freedom, which the Chinese government cannot ultimately prevent.
Taxpayers Acquire Failing Auto Company
After billions of dollars were spent over the course of two presidential administrations to keep General Motors afloat, the American car company filed for bankruptcy this week anyway.
Last year Cato trade expert Daniel J. Ikenson appeared on dozens of radio and television programs and wrote op-eds in newspapers and magazines explaining why automakers should file for bankruptcy—before spending billions in taxpayer dollars.
Which leaves Ikenson asking one very important question: “What was the point of that?”
In November, GM turned to the federal government for a bailout loan — the one final alternative to bankruptcy. After a lot of discussion and some rich debate, Congress voted against a bailout, seemingly foreclosing all options except bankruptcy. But before GM could avail itself of bankruptcy protection, President Bush took the fateful decision of circumventing Congress and diverting $15.4 billion from Troubled Asset Relief Program funds to GM (in the chummy spirit of avoiding tough news around the holidays).
That was the original sin. George W. Bush is very much complicit in the nationalization of GM and the cascade of similar interventions that may follow. Had Bush not funded GM in December (under questionable authority, no less), the company probably would have filed for bankruptcy on Jan. 1, at which point prospective buyers, both foreign and domestic, would have surfaced and made bids for spin-off assets or equity stakes in the “New GM,” just as is happening now.
Meanwhile, the government takeover of GM puts the fate of Ford Motors, a company that didn’t take any bailout money, into question:
Thus, what’s going to happen to Ford? With the public aware that the administration will go to bat for GM, who will want to own Ford stock? Who will lend Ford money (particularly in light of the way GM’s and Chrysler’s bondholders were treated). Who wants to compete against an entity backed by an unrestrained national treasury?
Ultimately, if I’m a member of Ford management or a large shareholder, I’m thinking that my biggest competitors, who’ve made terrible business decisions over the years, just got their debts erased and their downsides covered. Thus, even if my balance sheet is healthy enough to go it alone, why bother? And that calculation presents the specter of another taxpayer bailout to the tunes of tens of billions of dollars, and another government-run auto company.
New Media, New Repression: China Blocks Social Networking Sites
Today marks the 20th anniversary of the massacre of students and other anti-authoritarian protests in Tiananmen square.
If you want background info, including causes and the wider political context, check Wikipedia.
You can also see stirring videos on Youtube.
There are incredible photos on Flickr.
And of course Twitter has a wealth of real-time information and thinking about the anniversary. Just search using the hash tag #Tiananmen.
But for those 1.5 billion people trapped behind the Great Firewall of China, absolutely none of those links are accessible. To mark the event that the government assures never happened, the Chinese government has blocked most social networking sites.
In 1989, when a nascent pro-democracy movement wanted to communicate its vitality and prepare to take on the state, meeting en masse was vital. But that made it fairly easy for the CCP to roll in and crush the dream of democracy.
Twenty years later, the Internet is the place where mass movements for liberty can take root. While the CCP is attempting to use the electronic equivalent of an armored division to prevent change, reform today is a question of when, not if. Shutting down open dialogue will only slow the democratic transition to freedom, which the Chinese government cannot ultimately prevent.
The leadership of today’s Chinese government should allow that country’s citizens and journalists to communicate openly. The alternative is to suffer eternal loss of face as history records them occupying its wrong side.
Who’s Blogging about Cato
Here’s your weekly roundup of bloggers who are writing about Cato research and commentary:
- Liberty Maven blogger Mike Miller cites Jim Harper in a post about the effort to impose a national ID card on American citizens.
- W.E. Messamore, AKA The Humble Libertarian, interviews Cato health analyst Michael D. Tanner about Obama’s plan to overhaul the health care system.
- Insider Online blogger Alex Adrianson covers Cato’s standoff with Hugo Chavez supporters and government agents during a pro-free market conference in Venezuela.
- Writing for Real Clear World’s Compass blog,
- At Red State, Ryan Ellis uses Michael Cannon’s research in a post about a market-based alternative to government-run health care.
- Blogging for Young Americans for Liberty, Jeff Hubbard and Elliot Engstrom write about Cato University and Ilya Shapiro’s CNN commentary on Sonia Sotomayor.
- Blogger David Kirkpatrick cites Daniel J. Ikenson’s analysis of the GM bankruptcy.
Let us know if you’re blogging about Cato via email or Twitter.
Who’s Blogging about Cato
Are you blogging about Cato? Let us know. Send a link our way @catoinstitute or email cmoody@cato.org
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- Georgia Examiner writer and blogger Jason Pye offered his thoughts on Ilya Shapiro’s post about the “Jefferson 1.”
- Wes Messamore finished his list of the top 100 libertarian blogs and Web sites.
- Free Marketeros editor James Barcia linked to Juan Carlos Hildalgo’s new report on the success of El Salvador’s free market reforms.
- Health care writer John Goodman discussed John Cochrane’s recent Policy Analysis on market-based strategies to improve health security.
- At NRO’s The Corner, Veronique de Rugy is following the debate between Cato scholar Chris Edwards and French economist Thomas Piketty over whether the rich should pay higher taxes.
Who’s Blogging about Cato
On April 3, Cato hosted a special blogger briefing with Glenn Greenwald, who was here to speak about his new paper on the success of drug decriminalization in Portugal.
Here are a few highlights from bloggers who wrote about it:
- Dan Bernath from the Marijuana Policy Project
- Scott Morgan of StopTheDrugWar.org
- Jesse Singal, associate editor of Campus Progress, a project of the Center for American Progress
Also, a few links to bloggers who are writing about Cato:
- Citing new research that shows that the DC school choice pilot program was highly successful, Betsy Newmark linked to Andrew J. Coulson’s commentary on the study results.
- Ilya Somin discussed Patri Friedman’s new essay at Cato Unbound about the Seasteading Institute and the history of libertarian activism.
- Blogger Connie Carr wrote about William Niskanen’s essay in the new Cato Policy Report, “How to turn a Recession into a Depression.”
If you are blogging about Cato, let us know by emailing cmoody@cato.org or catch us on Twitter @catoinstitute.
Filed under: Cato Publications; General; Law and Civil Liberties
Who’s Blogging about Cato
Here’s a list of bloggers who wrote about Cato this week:
- Jason Shafrin, AKA the Healthcare Economist, blogged about a recent Cato paper, “Does the Doctor Need a Boss?” by Michael Cannon and Arnold Kling.
- Anna Raccoon linked to an upcoming Cato event featuring Glenn Greenwald on drug decriminalization in Portugal.
- Taylor March blogged about last week’s Cato event, “Can the Pentagon Be Fixed?” and covered it live on her Twitter feed.
- Skyler Collins blogged Gene Healy’s comments on presidential power.
- Freedom Politics linked to Andrew J. Coulson’s blog post that notes the lack of media coverage of injustice in education.
- Greg Newburn discussed Gene Healy’s thoughts on voting at Fr33Agents.
If you’re blogging about Cato, contact Chris Moody at cmoody@cato.org.
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