Dishonesty in the neutrality

“Net Neutrality” is a political term and, as with most other political terms, it is fundamentally dishonest, with the objective of hiding the underlying reality. The purpose of the rules is control for political gain. It is primarily about substituting a central planner’s decisions for those of market participants. It is the denial of rights of the owners of productive assets who serve the market called the internet.

The proponents of the rules don’t like to call it central planning. Fairness and neutrality sound so much more friendly and benevolent than “government interference” and political manipulation,” though the latter are reality. The regulators believe that they know what the market needs better than the market does.

One thing that is virtually guaranteed is that the rules will be written or heavily influenced by the big players, the market participants with lots of political clout. Those players are not interested in innovation, efficiency, or customer needs. In the market, that is all they have to generate revenue. If customers are not satisfied, they can and will go to the competitor. When political strings are easy to pull, there is no need to worry about the market. One needs only satisfy the regulator. The common name for that is regulatory capture, and it exists whenever there are market regulators.

A dissenting commissioner of the Federal Communications Commission, Ajit Pai, portrays the new rules as “a solution that won’t work to a problem that doesn’t exist.” On the other side, FCC Chairman Tom Wheeler called it his proudest day. He said that the internet is too important to let broadband providers set the rules. In other words, competition in the market is bad, while political control over markets is good. There should be no doubt in anyone’s mind that politics underlies the entire effort.

The internet has been a frenzy of innovation and development since it became widely used in the 1990s, with access continuing to expand, with new services being offered, and new industries popping up that weren’t imagined 30 years ago. The internet has become a central feature of the modern economy. It is certainly important, as the Chairman said, but it is actually too important to let politicians or unaccountable bureaucrats set the rules.

Chairman Wheeler, President Obama, and other manipulators hold the false notions that the economy is a machine and that they have the competence and knowledge to pull the levers for the desired results. They ignore the perverse incentives of political action and the prior failures. In the words of F. A. Hayek in his Nobel Prize acceptance speech, they suffer from the “pretense of knowledge.” Not only do they not have the knowledge to do what they intend, the market changes constantly, so that the knowledge they have today is outdated tomorrow. The market is simply the interactions of millions of people acting on their own knowledge, assumptions, goals and dreams. Most of that knowledge is local and personal and cannot be known by a central authority.

Whatever the rules evolve into, the internet will march on. What is certain is that the benefits of lobbying by powerful interests will have intensified under the new rules. Billions of dollars will be made or lost depending on who controls the politics rather than on who gives the best service to the most people.

Central planners always and everywhere have to use coercion and abuse the rights of property owners. Since that is not very palatable to most people, they tend to keep the public in the dark and use dishonesty as a sales tool. Quite unfortunately, it seems to be too effective.

Daniel McLaughlin is a Randolph resident. Visit daniel-mclaughlin.com for more commentary, for links to other resources, or to leave a message.