[e2e] It's all my fault

[Tom Vest]

On May 18, 2007, at 6:46 AM, Vadim Antonov wrote:

> On Thu, 17 May 2007, Ted Faber wrote:
>
>> On Wed, May 16, 2007 at 07:33:03PM -0700, Vadim Antonov wrote:
>>> The real role of the government in the history of the Internet was
>>> stalling, obfuscating, and supporting monopolism.  If not for the
>>> government-propped monopoly of AT&T, we'd see widely available  
>>> commercial
>>> data networks in early 80s, not in 90s - the technology was there.
>>
>> Governments do not support natural monopolies like the telecom  
>> network,
>> because they have no role in those monopolies.
>
> Now we got into the Alice's Wonderland, I guess. No role? Huh? FCC  
> does
> not regulate telcos? Since when? Can I dig in a cable into the ground
> without asking various government busybodies first?

In the state of nature, if the ground wasn't held by someone else,  
then you could do whatever you wanted with it.
In the state of nature, if someone else controlled it, and didn't  
want you to dig, then you could try to persuade them by some means.
In the state of nature, if you couldn't persuade them, but you were  
stronger then they were, then maybe you could do it anyway.
People didn't like that risk, so they created governments, and  
property rights, and other kinds of laws and regulations too.
Perhaps in the fantastical, never-to-be-seen world of pure markets,  
where property rights are miraculously respected even though no other  
laws or law enforcement mechanisms exist, things would be different.

I like speculative fiction as much as the next guy; I just demand a  
slightly more plausible plot line to achieve the necessary suspension  
of belief...

> What about the land
> grants and easements for the cable plants? What about patents?   
> What about
> "lawful access" requirements? What about Public Utility Comissions and
> their price-fixing? NO ROLE???
>
>> Significant economies of
>> scale and high capital barriers to entry will shut other providers of
>> similar services out of the market completely.  Even without  
>> aggressive
>> action by the providers, this leads directly to monopoly.  That's a
>> property of the market, not a government imposed attribute.
>
> Economics 101 - natural monopoly (aka single provider) and monopoly  
> are
> not the same. By far. The "natural monopoly" cannot exploit  
> consumers by
> raising prices or by reducing services using its "monopoly" position
> because doing so will create opportunity for entrance by a smaller
> competitor.

Ahem, apparently a review of Economics 100 is in order here.

> Real monopolies which depend on government enforcement of its  
> "rights" can
> deter competition and thus can exploit consumers.
>
> In fact, scale is not an issue whatsoever. No matter how large a  
> "naturaly
> monopolistic" company is, it is always possible to borrow enough  
> capital
> to create a comparably sized company. The history of Internet fiber  
> glut
> demonstrates that pretty conclusively.

Ahem, the capex involved in building point-to-point facilities  
between 400-500 buildings is somewhat less than the cost of building  
same between 4-5 million (or 40-50 million, or 400-500 million)  
premises.

>> Furthermore, all recorded cases of natural monopoly have evidenced
>> aggressive action; providers in natural monopoly situations crush
>> competitors and resist changes to their market.
>
> "Aggressive" is either a) violent or b) vigorous.
>
> "B" means innovation, price cutting, and otherwise serving customers
> better. This is _good_. If somebody seres customers much better than
> anyone else could, then it is the best possible outcome for customers.
>
> "A" means using actual or threatened violence to suppress competition.
> Because governments have monopoly on the legal violence, the only  
> way to
> do "a" is to collude with goverment and let the lawyers to sic  
> judicial
> powers of the government (which has the guns) on the competition.
>
> Note that "a" requires government playing a central role.

Sigh. The conveniently excluded middle here is that commercial/ 
financial/market power is fungible -- just because it doesn't usually  
manifest in the form of armies doesn't mean that it can't be used to  
affect the exact same kind of outcomes that are commonly associated  
with violence and armies -- or that it can't buy armies on occasion.  
Banishing governments wouldn't banish power or the bad behavior that  
results from too much power, it would just align the distribution of  
such things to the distribution of wealth -- which is a cumulative  
fact. The strong would still do what they willed, the weak would  
still do what they had no choice but to do.

If you can tell me what, in a pure market world, would prevent  
powerful market actors at time T from "fixing things" to assure their  
continued dominance at time (T+x), then maybe I'll join the party.

>> Why would they do differently?
>
> Yes, why would they when they can buy enough politicans to do a joe  
> job on
> potential competition instead of competing fairly.

Lets stipulate that all governments are somewhat corrupt all of the  
time. Are you arguing that no private entities are ever corrupt any  
of the time -- or rather are you saying that all should be fair in  
love, war, and competition, i.e., that the ideas of fair/unfair and  
honest/corrupt are simply meaningless in all-market world? I'm not  
sure if I'd call that fatalism or nihilism, but I'm pretty sure that  
whatever adjective applies wouldn't be very complimentary.

>> If US telecom were really deregulated tomorrow - no requirements to
>> share infrastructure, no limits on size, no service requirements -
>> there'd be one phone company in a decade at the most.
>
> I'm sure they told exactly the same nonsense when MCI tried to  
> break the
> long-distance market open.
>
>> It's hard to see how you can characterize this as monopoly  
>> protection.
>
> Monopoly protection requires actual or threatened violence. In the  
> modern
> world only governments do that at the large scale.


This is just proof by assertion, with the particular assertions in  
question coming from orthodox libertarian ideology.


>> You couldn't lease a T1 before the government made AT&T lease you  
>> one -
>> an action I'm surprised you don't characterize as the government
>> stealing AT&T's capital.
>
> Yep. Considering that the government made AT&T a monopoly, that  
> sure is a
> relief. You may want to actually read the text of Kingsbury  
> Commitment.
> Oh, and don't forget the Bell's patent on a system which other  
> people were
> developing at the same time.

If AT&T became a monopoly only because government intervention, then  
one wonders why the monopoly service provision model was 100%  
globally uniform before the mid-1970s.

If the explanation is that governments were responsible everywhere,  
then the fantasy world / speculative fiction rule applies. Don't  
declare that governments are the problem; persuade me why and how  
exactly your preferred hypothetical world would be better than the  
one we actually live in.

>> It's a lot more difficult to build a nationwide (to say nothing of
>> worldwide) data network if you have to spend the capital to run the
>> lines.
>
> Hard, not impossible. Many companies have done that.

Can you provide one or more example of a country that possess two or  
more completely physically independent telecom facilities platforms  
that are equivalent in scope/scale and provide equivalent  
(substitutable) services? I've built large-scale IP network in a lot  
of countries, and I haven't observed any place like that yet.

>> Without the government(s) acting in direct conflict with monopoly  
>> interests
>> by forcing access to the infrastructure and financing the development
>> of the technology there would be no commercial Internet today.  There
>> might be one in decades, but it would cost more and be more  
>> constrained,
>> IMHO.
>
> Yeah, yeah. First, create a problem. Then valiantly wrestle with the
> problem (creating more problems along the way). That's the modus  
> operandi
> of any federal agency I've seen so far.
>
>> Now, I don't think that the government had a coordinated plan to  
>> create
>> a new market, but without the (accidental) confluence of those  
>> actions,
>> the Internet would be unlikely to emerge.
>
> Governments do not create markets. They cannot. Markets are created  
> by the
> acts of voluntary exchange between people, and precede governments  
> by tens
> of thousands of years. (Heck, even apes do some trading among  
> themselves).

In a pure marketplace of ideas, I might try to silence someone who  
believed that -- or more likely I would need to arm and physically  
defend myself against the "vigorous" efforts of marketarians to  
silence me. Unless perhaps I lived in that special market-only  
universe described above, where opinions and property values are  
universally regarded as sacrosanct, and no one ever violates that maxim.

> What governments can do is destroy markets. Fortunately, US is not  
> so far
> gone down that road as was good ol' USSR.

I think I'll declare a Law of Conservation of Markets here:
Markets are never created or destroyed, but merely change form in  
accordance with the rules imposed by external (law) and internal  
(market power) agencies.

TV, really the last polemic I promise