Category Archives: Economics

Government Spending Has Been Flat The Past 5 Years. No, Really!

Revenue and Spending 2000-2019 (estimated)

Back in 2011, I looked at some CBO projections, and said that the country was in dire straits financially. Spending seemed to be on an absolute tear, and revenue–even if it lived up to wildly optimistic projections–wasn’t going to come close to keeping up.

Essentially, the CBO projections pointed to spending occurring at absolutely unprecedented levels, and relied on completely unrealistic projections of economic growth to [not quite even] pay for it. At the time, I said:

Even with those assumptions, where does spending fall historically? Even at these rosy projections, it never falls under 22% of GDP (on par with the highest spending the country has seen since WWII), and those rosy projections came in January 2010. A year later, in January 2011, the CBO outlook got worse. It now shows spending never falling under 23% of GDP during the decade 2011-2020. Historically, spending has not exceeded 23% of GDP for a single year between 1946 and 2008.

Where has revenue been over the last few decades? Well, for the years 1991-2000, during which time we suffered one mild recession followed by the tech bubble, total government revenue averaged 18.75% of GDP. For the years 2001-2010, where we dealt with the tech bubble collapse followed by the subprime bubble and then crash, total government revenue averaged 17.07% of GDP. A sizeable drop, to be sure (the worst spots being 2009 & 2010, where the financial crash slammed revenue below 15% of GDP). But fundamentally not that far out of line with historical precedent.

Now, I hadn’t gone back to look at the numbers since then. So I was very surprised to read a Cato post suggesting that spending was stagnant and was sitting at a mere 20.3% of GDP, not the 23%+ area that the CBO was projecting. As Daniel Mitchell from Cato puts it (emphasis added):

Here are some specific numbers culled from the OMB data and CBO data. In fiscal year 2009, the federal government spent about $3.52 trillion. In fiscal year 2014 (which ended on September 30), the federal government spent about $3.50 trillion.

In other words, there’s been no growth in nominal government spending over the past five years. It hasn’t received nearly as much attention as it deserves, but there’s been a spending freeze in Washington.

I was frankly shocked. So I ended up going straight to the OMB data (note: it’s an .xls file) to confirm.
Revenue and Spending 2000-2019 (estimated)
Looks pretty legit. Spending was pushing well above 23% GDP for a few years due to the economic meltdown, the stimulus, and the continuing effects of global war.

What’s interesting, and I pulled this out of the graphic for clarity (go download the original source data if you want to confirm) is that this is NOMINAL spending. Considering there has been inflation since 2009, it’s actually fair to say that spending has decreased in real dollars over the last 5 years.

Spending is well below the CBO projections from 2010 that I used in my previous post. And frankly, revenue is WELL below their projections as well. But the spending restraint is sufficient to keep both spending as a percentage of GDP and deficits as a percentage of GDP in reasonable territory.

Now, there are always devils in the details. Mitchell points out a few in his post at Cato, and has even more to say on the subject here. But either way you slice it, the fiscal meltdown that many (including me 3 1/2 years ago) were predicting hasn’t come to pass.

Some on the left will credit Obama (even though they’ve never seen spending they didn’t like). Some on the right will credit the Tea Party (even though they spent the 8 years prior to Obama spending like a Kardashian wedding).

As for me, I’m just going to say that I’m glad my predictions–based on CBO projections–didn’t come to pass.

Climate Change… The New Inquistion

I was searching for something else, and I came across this piece I wrote back in 2007…

…And perhaps unsurprisingly, not much has changed today, except that now catastrophists are saying EVERYTHING is proof of climate change.

Climate change can apparently do anything whatsoever, including mutually exclusive and contradictory things, because “science”.

It’s absolutely unfalsifiable.

I decide to republish it here, to point out, that while the science against the catastrophists has only accumulated and strengthened; their stridency and grasping demands have only increased.

I say again, the concept of catastrophic anthropogenic climate change, except in the case of localized micro-climates, holds absolutely no scientific water.

Honest scientists will tell you the same thing if pressed (and if their funding doesn’t depend on it), but the agenda politics of todays science (admittedly on both sides of the political spectrum, but generally on different subjects), prevents real, honest, science from occurring anymore; or from being reported if and when it is (the record of suppressing science which disproves catastrophic anthropogenic climate change is long and shameless at this point).

The mere language used by catastrophists against those who seek to use actual science rather than sociopolitical ideological faith, calling us “deniers” in an attempt to paint an equivalence with holocaust deniers, should make it clear that their concern is not truth.

The honest numbers are simple.

Global temperatures have risen an average of less than 1 degree centigrade since measurements started being taken (“adjusted measurements”, which have been conclusively proven to be inaccurate and possibly deliberately manipulated say it may be as much as 1.8 degrees, but that is the absolute maximum).

There is no “sudden and precipitous increase”. There is no hockey stick. It was a lie, and even many of the climate change people have admitted it. The ice caps aren’t melting, in fact in most areas they are thickening slightly. The sea level isn’t rising any more than it would have naturally.

Oh and in case you didn’t know… Polar bears are excellent swimmers.

More damning to the catastrophists faith; even by their own admission, there has been NO rise (and there may in fact have been a slight decline) in global average temperatures, SINCE 1996.

Since temperature recordings have begun, volcanic eruptions have put more carbon into the atmosphere, and caused more temperature change, than all of human industry and activity since the beginning of the human race; but it wasn’t by increasing temperatures with carbon, it was by decreasing them with dust in the air… much of which was in fact carbon particulates.

The world has been far colder than today at times when there was far more carbon in the atmosphere; even without more dust. The world has been far warmer than today with far less carbon in the air, even WITH more dust.

The amount of anthropogenic carbon dioxide and carbon particulates in the atmosphere are FAR less than one half of one percent of total carbon dioxide, and far less than one half of one percent of total carbon particulates (the vast majority of CO2 is released by soil, rotting vegetation, oceanic microorganisms, and seafloor offgassing. The vast majority of particulates, are released by forest fires, and volcanic activity ). Considering how small a percentage of our atmospheric carbon and carbon compounds (between 0.03 and 0.06 percent. Not between 3% and 6%, 3 one hundredths of a percent), that amount is completely insignificant to global climate change.

This is not to say they don’t effect local microclimates, they certainly do. But in those local microclimates, these concentrations are literally hundreds to thousands of times higher.

These levels of anthropogenic CO2 in the atmosphere are not a temperature driver, or a climate forcing.

In fact, historical records show that overall CO2 levels (which, remember, human inputs make up only a tiny fraction of) TRAIL global climate change by anywhere from a few hundred years, to a few thousand.

All currently existing GLOBAL climate change can be fully and scientifically explained by natural endothermic cycles (atmospheric oceanic interaction combined with volcanic and other geothermal activity, and large particulate emissions such as forest fires, plus natural greenhouse component and other climate forcing component emissions), and the fluctuation in output of the sun (because earth is an exothermic system). The suns output has varied greatly over the course of human history (and of course long before), and periods of warming and cooling have tracked right along with that output.

Models using average sunspot activity as an indicator of solar thermal forcing, have proven to be accurate within a few percentage points at predicting historical temperatures.

Some models (those used by catastrophists) predict that there may be FUTURE global climate change based on a theory that human generated carbon inputs, even though they are far lower than historical levels which did NOT cause these things to happen, will somehow cause the entire climate system to change the way it has always functioned.

These models are ridiculous on their face. The way you test a model is to run if forwards and backwards without adjustment, and see if it can accurately predict what actually happened in the past, using the data from further back in the past; then verifying against actual future results over time.

None of the models that predict significant global climate change due to human carbon inputs, come anywhere close to predicting the historical record.

They always consistently overestimate warming by SEVERAL HUNDRED PERCENT, as in estimating 4 to 8 times the actual warming.

And NONE of them came anywhere close to predicting the variability of the historical record, always showing a consistent warming trend over time, even for CENTURIES that had a significant cooling trend.

The models were not made to predict the actual climate… they were specifically made to predict massive warming, no matter the input. And that’s what they do, as non-catastrophists have proven, running data which any rational model should predict steady or cooling temperatures through the models… and they STILL predicted significant warming.

I leave it up to you to decide whether the models were just designed badly, or whether the distortion was intentional. Either way, these models cannot be trusted, and decisions should certainly not be made based on them.

The climate IS changing, and has since the moment the earth formed a climate. As near as we can tell (through ice core samples and the like) there has never been a period of more than 200 years without at least a 1 degree change in global average temperatures.

The climate will continue to change on its own, and no NORMAL human activity will change global climate significantly one way or the other… unless it’s something that actually would kill us all (which would by definition not be normal… Incredibly massive particulate pollution over a high percentage of the earths surface – including the oceans – would do it. It would initially trigger warming from trapped thermal radiation, followed by extremely rapid cooling from blocking out the sun, and then a sudden ice age; and likely kill all crops and food animals in the process, along with at least 80% of humanity in the first two years, if not more, and ultimately followed by mass global extinction).

That isn’t to say we shouldn’t attempt to develop better sources of energy, we should. We aren’t going to “run out” of oil… ever in fact; a basic understanding of economics would show that. But, eventually hydrocarbon fuels are going to get more and more expensive as time goes on, and petroleum fueled combustion engines are relatively inefficient, and do contribute significantly to micro climate pollution.

In many ways, doing things greener IS in fact better. Saving energy is generally a very good thing. Not polluting is generally a good thing. When it isn’t, is when it destroys economies, prevents job growth, reduces food production, increases food prices, and all the other ways that forced greenism (I won’t even call it environmentalism, because it isn’t doing the environment much good), causes pain, suffering, misery, and general reductions in peoples health, quality of life, standard of living, and basic liberties.

“Climate change” isn’t about the environment… It’s about giving financial and political control to anti-western, anti-capitalists…. Or just the cynical opportunists who would use peoples good intentions and fears to increase their own power.

It’s about punishing those rich capitalist nations and people, for not being poor socialists… Or just for “not doing things the RIGHT way”…. whatever that particular person or group happens to think the “right” way is.

It isn’t science, it’s a pseudo-scientific sociopolitical ideological movement, and near religion. The adherents don’t need any proof, because they have faith; and any who challenge that faith must be burned as heretics in their new inquisition.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

Do Rich High School Dropouts Do “As Well” As Poor College Grads?

Poor Grads & Rich Dropouts

That’s the claim of Matt O’Brien at Washington Post’s Wonkblog, in a post titled (unsurprisingly), “Poor kids who do everything right don’t do better than rich kids who do everything wrong.” His main point:

Even poor kids who do everything right don’t do much better than rich kids who do everything wrong. Advantages and disadvantages, in other words, tend to perpetuate themselves. You can see that in the above chart, based on a new paper from Richard Reeves and Isabel Sawhill, presented at the Federal Reserve Bank of Boston’s annual conference, which is underway.

Specifically, rich high school dropouts remain in the top about as much as poor college grads stay stuck in the bottom — 14 versus 16 percent, respectively. Not only that, but these low-income strivers are just as likely to end up in the bottom as these wealthy ne’er-do-wells. Some meritocracy.

So the anger is that some rich dropouts still succeed and make it to the top, and some poor college grads remain on the bottom. Or, to annotate a graph as O’Brien did:

Poor Grads & Rich Dropouts

This, however, is a terrible analysis.

First and foremost, it doesn’t live up to his title. Poor kids who do everything right do quite a bit better than rich kids who do “everything” wrong. Only 20% of rich kids who don’t graduate high school make it into the top 40% of income earners. 41% of poor college grads make it into those upper quintiles. Almost 70% of poor college grads make it into the top 60% of income earners. Only 49% of rich HS dropouts do so. The other half of rich high school dropouts end up in the bottom two quintiles, as you’d expect from high school dropouts.

Now, nobody will argue that poor kids don’t have an uphill battle from day 1. And nobody will argue that rich kids have a multitude of advantages in front of them. Their path to success is easier. There are many reasons for this, and I’m not going to go into them here, but suffice to say that I agree with the simple premise that it’s harder to succeed when you start out poor.

But what the graph that O’Brien uses to prove his point is actually proving that putting your nose to the grindstone, pushing yourself to enter and complete college, is important whether you’re rich or you’re poor. If rich HS dropouts were successful at a higher rate than poor college grads, I might agree with this analysis. But they’re not. Poor college grads do measurably better than rich HS dropouts.

Yes, some poor college grads still end up on the bottom, and some rich HS dropouts still succeed. But how many, and why? Compare the above chart with the below (also from the Reeves/Sawhill paper):

Overall mobility

Social Mobility Matrix, US Overall

In this chart, you can see that the bottom quintile–60% of them, in fact–stayed in the bottom two quintiles. Only 23% made it to the top two quintiles. And the top quintile–56% of them–remained in the top two quintiles. Only 25% fell to the bottom two quintiles. So overall, completely outside of any educational data whatsoever, the bottom remained on the bottom and the top remained on the top.

But if you’re poor, and you graduate college, you flip the script. Your odds are very good to go from the bottom quintile to middle class or better. And if you’re rich but don’t graduate college, your odds are better that you’re going to end up in lower middle class or worse. It won’t hold true for everyone, as there are strong cultural factors in play. But those cultural factors are not overwhelming. Demography DOES NOT equal destiny.

That’s meritocracy.

Community Conservatism – Reviving the Middle Class Economy

median_income

Governing for a Healthy Middle Class Economy

Conservatives do not believe that the government can “create” jobs directly. This canard of the left does nothing but destroy market-driven, sustainable jobs at the expense of increasing the national debt and attaching an anchor to GDP growth in exchange for short term government employment and expanded private sector government influence. That doesn’t mean that a conservative Congress can’t stand for job creation. The way we get there is by providing the modern infrastructure, economic freedom, and competitive tax code that attract, rather than repel the world’s wealth. We want to decrease the cost of doing business here at home and focus government resources on business-supportive roles, rather than coercive ‘partnerships’. It begins with a smarter tax code.

A) Pass Corporate Tax Reform (dare Obama to veto)

I don’t recommend settling for half-measures here and I recommend putting this near the top of the agenda for 2015. Obama has, on multiple occasions, put Corporate tax reform in his state of the union address in his 6 years in office (five addresses, 4 mentions). Corporate tax reform that accomplishes the closing of certain loopholes, the ending of certain forms of corporate welfare, and the reduction of rates to something that competes with the rest of the developed world has broad, bipartisan support among the voting middle class. In Washington, such measures have met with stiff resistance from corporate lobbies who do not want to see the corporate tax base broadened to include them, specifically (through the removal of loopholes). Let the GOP stand for the voters, not for special interests, and pass comprehensive corporate tax reform that does the following:

• Cuts the corporate tax rate to 25% at most
• Creates a two-tiered capital gains tax bracket, where all capital gains are taxed at a much lower rate below $250,000 each year
• Excises many of the tax-sheltering loopholes used by the biggest corporations to avoid paying; in particular, the shelters to profits earned overseas by American companies
• Gives corporations a ‘tax holiday’ to repatriate foreign capital until January of 2021
• Creates a lower corporate tax rate for wealth generated by manufacturing concerns – 15%, perhaps

There are, I’m certain, other great ideas that could be included in a sweeping change like this, and we’re all ears. This is just a start. The goal is to create an environment that encourages businesses to take risks and expand their workforce here at home without taking the punitive approach championed by Obama (penalize companies that keep their money overseas, rather than improve the economic climate at home).

B) Pass the REINS Act (obtain Obama’s veto)

REINS is a relatively simple piece of legislation passed in the GOP-controlled house and left to gather dust in Harry Reid’s file cabinet. It requires congress to approve all regulations in excess of $100M as scored by the Congressional Budget Office each year. If said regulations cannot be approved, they are immediately stricken. This is good policy on so many levels, not the least of which is that it maintains the separation of the non-political government agencies from the political process in the drafting of public policy regulations but forces Congress to exercise some oversight on those regulations that are particularly costly. We recognize that regulatory science should not be trapped by the political process, but we also believe that unelected agencies should not have carte blanche to pass regulatory rules without oversight that serve as a huge burden to economic growth. It will give the voters some ability to hold their representatives responsible for the regulatory state and encourage those who draft said regulations to minimize their costs or garner broad public support for their necessity. It will also make public the CBO scoring of the cost of every major regulation, helping the public to get a sense for the true costs and benefits of each.

C) Return the Full-Time Workweek to 40 Hours

We’ll talk more about the Affordable Care Act when we get to healthcare, but one of the most pernicious things the ACA accomplished was to effectively reduce the American workweek to 30 hours in the eyes of the law. Democrats supported this concept to avoid the tendency of corporations to get 39 hours of work per week out of employees to avoid having them counted as full time and thus be forced to offer benefits. The problem, of course, is that reducing the workweek to 30 hours meant a lot of people just got cut down to 29 hours. If you’re a struggling poor or working class American, this tends to drive you to take two part time jobs and you end up working more and still not getting benefits, or working drastically less and not making enough money to survive. If all else fails, regarding the ACA, increasing the workweek back to 40 hours at least offers some relief for people in this situation (and the CBO projects a big surge in part time labor under the ACA as it currently stands).

D) Expand the Earned-Income Tax Credit

Right now, if you earn less than $11,000 for an individual or $88,000 for a family filing jointly, and are legally eligible for that work, you can claim an earned-income tax credit (variable by family size and earnings). The EITC is good policy for the poor and working classes and should be expanded with increased credit sizes (perhaps another 30-40% proportionally) and availability (up to incomes of less than $125,000 for a family filing jointly). Make this revenue neutral by creating a “super-wealthy” tax bracket (>$1,000,000) that is taxed at a slightly higher rate and by eliminating eligibility for certain tax credits for people in this new upper tax bracket. Normally, the GOP is not associated with eve the smallest of tax increases for the wealthy, but if we reduce corporate taxes as previously outlined, this sort of minor compromise will come out in the wash while selling as good, fair tax policy to middle class voters.

E) Exempt Small and Moderate-sized Businesses from Burdensome Regulation

Small business start-ups are responsible for the majority of new jobs that pay above the media household income. They’re also in sharp decline here in the US. One of the major reasons for this is that, when Congress enacts legislation to regulate business, it does so with larger businesses in mind. We recognize that it is indeed necessary to regulate larger corporations, because they can have disproportional impacts on the environment, the free market, and the welfare of the people. We also recognize that big business can absorb the cost of our most aggressive regulations, but small business cannot. We also believe it is unreasonable for small businesses, frequently run by citizens without the resources to educate themselves on the full extent of the regulatory state cannot be expected to comply to the same degree as larger corporations, and that their likely impact on people, the market or the economy is greatly reduced. We, therefore, must pass a law stating that regulations determined to be of great impact by the CBO as in the REINS act, should be applied only to corporations with greater than 250 employees or more than a negotiable amount of total assets.

F) Repeal Sarbanes-Oxley and Replace with Common Sense Reporting

Again on the subject of over-regulation, this panic-move following Enron’s collapse is among the worst offenders for needless corporate regulatory burden, annually costing billions in the private sector for compliance and producing no change in accounting transparency. It reminds us of the mindless and often pointless busywork we used to get in school, and compliance requires companies to hire a fleet of folks who are specifically experts in the labyrinthine letter of this law. It must go and be replaced by much simpler-to-follow guidelines for financial reporting.

G) Greenlight Keystone XL and Other Energy Infrastructure Projects on Federal Lands

The latest estimate by industry sources is that Keystone XL pipeline would create in excess of 20,000 good paying jobs immediately and have extensive multiply impacts on the job market, not to mention making it cheaper to move oil to high-demand parts of the country where oil prices are currently far too high. Our best environmental impact studies conclude that the XL pipeline would be a net positive for the environment if you assume that the alternative is transport by rail, rather than non-use. This is a no-brainer.

H) Abolish the Nuclear Regulatory Commission and Allow Nuclear Energy Expansion – Complete Yucca Mountain Facility for Waste Management

As the science improves to reduce waste products from nuclear fission power, and as the EU and Japan continue to move ahead of us on safe, clean nuclear energy, our ability to innovate and, perhaps, solve the problem of excessive fossil fuel emission is stymied by the anti-science left’s crusade against Nuclear Energy. It’s time to stop being parochial and superstitious in the face of overwhelming evidence that nuclear energy is, by far, our best source of affordable, clean energy.

I) Abolish the Export/Import Bank

It may not be immediately apparent how ending this brand of corporate welfare can help create jobs, but it becomes clearer when you realize that many of the businesses that benefit from Ex/Im assistance are the non-dynamic, struggling corporations not likely to hire a large labor force, and it always seems to come at the expense of healthy competition. Again, the key to job creation is a competitive, free market that rewards well-run companies, not the ones out begging for federal dollars to stay afloat and squash upstarts.

Obama Using “Net Neutrality” to Obscure Federal Take-Over of Internet

fiber-optic-cable“The government will fuck the Internet up.”

So says Mark Cuban. Truer words were never spoken. Allowing the federal government to treat the Internet as a public utility, as President Obama is calling for, under the guise of “net neutrality,” is an abysmally bad idea.

To be clear, “net neutrality” and public utility regulation are two different but equally bad ideas. It appears Obama is using the former in a cynical bid to trick the electorate into accepting the latter. Neither is needed and both are undesirable.

“NET NEUTRALITY”

Net neutrality is the idea that, having paid for Internet service, consumers should have unfettered access to all content. It would prevent a whole host of business model experiments that Internet Service Providers (ISPs) might otherwise try:

  • Selling tiered data plans like cell phone companies do.
  • Developing their own content and then delivering that content at higher speeds than they deliver a competitor’s content.
  • Creating different “lanes” of Internet traffic and charging higher prices to content providers or users for access to the “fast lanes.”
  • Preferring certain content providers to others, likely depending on who pays.
  • Blocking users from using certain online content that takes up too much bandwidth and slows down the network for other customers.

I see none of this as frightening. We pay different rates based on the size and weight of the mail we send. We pay different rates for concert seats, cell phone plans, Netflix memberships, cable subscriptions and a whole host of other services.

The sun still rises.

What consumers who demand heavy content at low cost really want is to have other users overpay for light content while suffering the slow buffering speeds caused by the heavey users. As Casey Given, writing for Rare, observes:

Even if the FCC’s worst fears come to fruition and ISPs start charging cell phone-style “plans” for different levels of Internet access, online access would only become cheaper for low data users. As it is today, a grandmother who logs online once a day pays just as much as the tech-savvy teenager next door who regularly downloads gigabytes of data. As such, she is subsidizing his usage and could instead be paying a cheaper rate if her ISP offered varying plans.

In any case, ISPs own their technology and infrastructure. They invested in that property with the aim of making a profit. The idea that the public has some sort of claim against the property of ISPs reflects a sense of entitlement I cannot endorse. Rights are things we get to do—not things we get to have at others’ expense.

It is where we stand on this principle in the hard cases that defines us.

In addition to heavy content users, the other main beneficiaries of net neutrality are Internet giants like Facebook, Google and Netflix. These companies do not want to be charged by ISPs for the heavy traffic their users generate while slowing down buffering speeds for everyone else.

But is there any reason we should prefer the profit of big content providers over the profit of ISPs? Is there some principle that says Netflix should be allowed to earn whatever profit the market permits—but not the ISPs who deliver its content to consumers?

As Doug Mataconis wrote for TLP back in 2010:

It’s Comcast’s network, [it] should have the right to decide how it’s used and to take action to protect its property and its other customers.

PUBLIC UTILITY REGULATION

Obama’s plan to regulate the Internet is not the same as net neutrality. His plan is to treat it as a public utility, the “most draconian” level of regulation that could apply. It would require ISPs to provide universal service, i.e., “wire up every house.”

It would also allow them to charge the rates necessary to recoup that expenditure at a profit. In fact, public utility regulations allow the type of tiered pricing net neutrality advocates want to prevent:

What some critics of the Commission’s recent proposal may not realize is that even if the FCC agrees to impose the price, non-discrimination, and other forms of common carrier regulation on ISPs, Title II reclassification, would not necessarily ban paid prioritization. As former enforcement director at the Federal Trade Commission, David Balto, has pointed out, the title only prohibits “unjust and unreasonable” differences in services. Carriers regulated under Title II still “may offer different pricing (including volume and term discounts) … so long as they are ‘generally available to similarly situated customers.’”

In plain English, all this means that if some websites, like Netflix, want “faster lanes” on broadband networks, the providers of those networks can charge extra for that service even under Title II, so long as they stand ready to offer the same service to all similarly situated comers.

So Obama’s proposal presents a solution that does not fit the purported problem—which may not even exist.

In June 2006, there were two or more broadband providers in 92 percent of the nation’s zip codes, and four or more providers in 87 percent. A June 2014 study found at least two providers (wireline and wireless) for virtually all of the U.S., and at least two providers (cable and telephone) in nearly three quarters. Nick Gillespie reports at Time Magazine that 80% of households have at least two providers capable of delivering the Internet at 10Mbps or faster.

This access has been achieved even as prices have gone down:

President Obama’s call this week to regulate the Internet as a public utility is like pushing to replace the engine of a car that runs perfectly well. The U.S. data sector — including wired and wireless broadband — is the envy of the world, administering a powerful boost to consumer welfare, generating high-paying jobs and encouraging tens of billions of dollars in corporate investment. Indeed, the prices of data-related goods and services have dropped by almost 20 percent since 2007.

So what is really going on? Does Obama really think the future of the Internet requires the government to sort out squabbles between Netflix and Comast?

I doubt it.

Maybe it is intended to deliver to big donors. Maybe it is about the 16.1% tax on interstate revenues that would be paid by broadband consumers. Or maybe it is something more sinister. As Christopher Bowen wrote last week:

The problem with the government regulating the internet is that … when they get to determine the rules, the consequences turn sinister.

*     *     *

What about communications of interest to the government, such as anything with heavy encryption? Or Tor?

The government has a direct interest in controlling that kind of traffic—hello, Wikileaks/Edward Snowden/any other whistleblower—and if anyone thinks the federal government will look the other way on these things, they are naive.

This isn’t just a possibility, it’s the reality of current legislation on the books, as Chris Byrne pointed out in 2006. Every single packet, every communication, every image, would be captured and stored—by law—if common carrier became the letter of the law in regards to internet traffic, without a warrant, and it would take just a rubber stamp to get a warrant that would be used to punish anyone the government pleases…

REGULATION HURTS INVESTMENT IN INFRASTRUCTURE

For years, federal agencies themselves have resisted calls for regulation, on the states basis that forcing ISPs to treat content neutrally was not necessary, would impede the development of infrastructure, and would have an adverse effect on consumer welfare.

That is because developing the technology to respond to demands for bandwidth requires heavy investment. In fact, in 2013, telecom and cable companies topped the list of industries investing in the U.S., to the tune of $46 billion in investment.

Regulation cuts into the profits that encourage that level of investment.

This Cato Institute podcast, for example, covers the fact that Google Fiber does not provide Title II (public utility) services precisely to avoid the onerous regulations that come along with such endeavor. Another stark reminder of this basic fact came in the wake of the President’s message. On November 12, 2014, AT&T announced it would delay installing high-speed fiber-optic Internet infrastructure in 100 U.S. cities until the rules were clarified.

Perhaps this is why the American people oppose regulation. A November 2014 survey by Rasumussen Reports found that 61% oppose federal regulation of the Internet. Only 19% want more regulation than we already have. What is more, seventy-six percent like the quality of their Internet access.

Only 5% have complaints.

At best this is a solution in search of a problem. At worst, this is a Jonathan Gruber style misinformation campaign, designed to lull the public into complacency as the federal government assumes control of the Internet.

This time, let’s not fall for it.

Image via BandwithPlace.com

Sarah Baker is a libertarian, attorney and writer. She lives in Montana with her daughter and a house full of pets.
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