Absurd Net Neutrality Alarmism

John Tamny

In the fall of 1987 Mercedes-Benz released its 1988 560 SEL sedan. The car was beautiful, full of gadgets including digital stereo, cassette player, leather steering wheel, and anything else the well-to-do of the time could seemingly want. For the safety conscious the car had anti-lock brakes (ABS), along with driver and front passenger airbags. The SEL’s seats adjusted electrically, as did its side mirrors. For buyers willing to spend a bit more, electric seat heaters were an option. Car & Driver and other auto enthusiast magazines wrote about the SEL in superlatives. The car retailed for over $68,000.

In 2006 Ford Motor Company discontinued its Ford Taurus. At the time Saturday Night Live’s comedy writers described the Taurus (this is a slight paraphrase) as “the car for people who’ve given up.” Eventually Ford brought back the automobile associated with average. Interesting there is that a $31,000 2018 Taurus has 4-wheel ABS, dual front side mounted airbags, front and rear head airbags, dusk-sensing headlights, a blind spot warning accident avoidance system, rear parking sensors and a rear-backup camera (to avoid dings), and a heated steering wheel. Electric seats are a given.

Back in 2006, only the higher-end suites at the Four Seasons in Austin, TX (the city’s most luxurious hotel) had flat-screen televisions. The regular rooms still had the box-shaped version. But by 2015 flat-screen tvs were standard not just in rooms at the Four Seasons, but also in most any Motel 6.

Air travel? Those rich enough to fly used to travel with flip flops, but only in their bags. They dressed up for what was a rare luxury. Nowadays people walk on to planes in flip flops, shorts, tank tops, and other garments associated with highly casual dress. Flying is what we all do now.

All of this is a reminder of what readers of this column know well: “luxury” is an ephemeral concept. Today’s obscure bauble of the superrich is tomorrow’s common good. In a growing economy prices are falling all the time. They are because investment is the driver of growth, and investment is all about producing more for less.

What’s also crucial when it comes to falling prices is the “venture buyer.” And while the truth about “venture buyers” may cause the heads of the overly sensitive to explode, venture buyers are rich. Often wildly rich. So rich that they can spend enormous sums on goods and services that aren’t broadly used, or understood. These buyers are crucial to progress because they can uniquely test the products put on the market by entrepreneurs and businesses. If they prove useful, great. If they’re duds, the rich are out substantial sums. That’s ok. Figure that they’re superrich.

Still, the goods and services deemed worthy by venture buyers act as a signal to the entrepreneurs and businesses, and the signal is clear: the innovators capable of mass-producing what superrich venture buyers uniquely enjoy will similarly become superrich themselves. There. It’s been said. Great wealth, the kind of wealth that causes inequality to soar, is frequently a function of entrepreneurs democratizing access to the goods and services formerly enjoyed by the rich alone.

All of which brings us to the endless emotion emitted by the extremely sensitive about so-called “net neutrality.” Up front, it should be said that the mere discussion of this topic speaks to the extraordinary confusion that is increasingly the norm among journalists and pundits. Simply put, there’s no such thing as a free good. We the people enjoy the internet and WiFi only insofar as private companies invested in the proverbial “pipes” that enable broad usage. “Net neutrality” was all about giving everyone — large and small — equal access to the internet. Ok, but that’s a violation of property rights. Plain and simple. End of discussion. Those who own the “pipe” should be able to do whatever they want with it, including charging different prices for access to the pipe.

Interesting here is that we have ‘net neutrality’ on roads and freeways already. It’s called traffic. The gridlock kind. When everyone’s equal, the result is aggravation.

Applying what’s silly to the cars that are driven on roads and freeways, can readers imagine how awful and unsafe they would be if buyers of them were made equal by government force? Or what about grocery stores. What if they couldn’t stock shelves in a way that maximizes sales? Why invest in property that’s not yours, as in property that you’re not allowed to maximize the potential of? Get rid of “net neutrality”? Of course. That’s basic common sense.

Except that the left are terrified about handing property rights back to the owners of the “pipe.” The always emotional Farhad Manjoo actually penned a column for the New York Times titled “Without Neutrality, Say So Long to the Internet.” A few weeks later Manjoo lamented the end of “net neutrality” given his prediction that “Slowly, big internet and telecom companies will have more and more of a say over what we do online, and start-ups will face a tougher time. Over the long run, the internet will become more like cable TV — you’ll pay for different bundles of services.” Manjoo’s Times colleague, the always predictable Jim Tankersley, observed much the same about the owners of the pipe — gasp — charging different prices to different customers.

Except that it’s through prices and freely arrived at price signals that we achieve progress. Thank goodness for segregated pricing simply because this lack of neutrality is what will create the incentives among pipe owners to invest in wildly expensive advances that will only be offered to the big and rich. If so, great. As we know from cars, flat-screen tvs, air travel, along with everything else, what the rich enjoy is merely a preview of what we’ll all eventually enjoy if markets are free. Manjoo and Tankersley bemoan segregated pricing on the internet, but the latter is the only way to provide constantly evolving internet services to everyone.

To be fair, Manjoo writes about technology without working in the business of technology. In Tankersley’s case, he went from the unreality that is college (those leafy campuses a creation of the rich that both writers would like the tax code to neuter) to being a journalist. It’s the fault of neither that the realities of business go well over their heads. What’s important is that successful businesses can’t be as careless in their analysis as they are. Every attempt to build market share is a speculation, and that’s why venture buyers of substantial means (whether individuals or businesses) are so essential to business growth. New ideas can be tested on them. If they’re good, they’ll soon enough be common.

Applied to net neutrality, Manjoo and Tankersley have unwittingly happened on why erasure of “net neutrality” will be so amazing for everyone. It’s the “bundles of services” model that will unearth the very internet advances that we’ll all eventually be unable to live without, but that the rich will test out for us first.

More broadly, and with circumspect when it comes to predictions very much in mind, those who possess common sense — as in they support property rights — owe it to Manjoo, Tankersley and others to never let them forget all of their apocalyptic predictions about Ajit Pai ending “net neutrality.” Indeed, if property rights are truly restored to owners of the pipe, the critics of this freedom will soon enough be very embarrassed. Those of us who are reasonable owe it to other reasonable people to make sure that supporters of ‘net neutrality’ are regularly — and loudly — reminded of just how silly their warnings were.

John Tamny is a Forbes contributor, editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research & Trading. He’s the author of Popular Economics (Regnery Publishing, 2015), Who Needs the Fed? (Encounter 2016), and then his next book, The End of Work (Regnery) about the ongoing explosion of jobs that don’t feel like work, will be released in 2018