03.14.07
Govt: Both The Problem And The Solution
Many of us that are pro-business feel that government regulations are the problem. Some even go so far as to favor nearly removing nearly all power from government, so that businesses will be free to act in the manner that they see fit. In part, these ideas are based on classical economic theory, such as that espoused by Adam Smith in his classic 1776 work, The Wealth of Nations.
I am currently reading Smith’s book. I can tell you that he did not espouse many of the things that are promoted in his name. But that, perhaps, is for another posting.
It is interesting, however, that our society is pretty deeply divided between those who feel that government in any area is a problem and those who feel that a problem in any area is merely awaiting a governmental solution. The Reagan revolution was not truly smaller government, but removal of some of the restraints that were choking the efficient conduct of business while simultaneously making targeted investments in key industries.
There is no question that some “safety net” features, including some that I consider necessary, were removed by or during the Reagan administration and the following Bush administration. The big shift in power from big labor to big business, for example, left workers without effective advocacy.
This is an example of an area where government policies caused the problems. With the preference set toward large corporations, smaller businesses and individuals lost most of the little bit of power and influence which they had left.
This entry from James Robertson tells how a big cable company’s decisions are hurting its best customers. The problem here is not that the company has limits on bandwidth consumption, but rather the fact that it will not admit this fact and give customers a firm limit. The ones who are using a lot of bandwidth are generally either infected with some spambot or are happy users of the service. Comcast would do well to contact such users and offer them a dedicated connection instead of the neighborhood pool. This would give them additional revenue to cover any costs they may have, but it would also give them positive publicity.
The real problem with cable is the fact that each cable company gets an exclusive connection to homes in a certain area. I realize that there is a “natural monopoly,” which makes it more costly to have a second and a third company come and lay cables to everyone’s homes. However, cable companies get a “franchise,” which is a usually-exclusive contract with the local government (town, city, county). Consumers do not have a choice of cable providers.
If Joe’s cable is your local provider, you rarely have a second cable operator that you can use if Joe’s service is bad or Joe’s prices are too high. Joe has little incentive to improve (satellite, over-the-air, and “wireless cable” each have their own issues). The fact is, consumers can either pay for cable or do without.
The point is, government decisions such as the area of exclusivity are the real cause of the problem. Any solution will necessarily involve government decisions also.
In the case of cable and DSL Internet, we need to separate the ownership and maintenance of the wires and cables (including fiber optics, satellite systems, and other carrying infrastructure) from the actual retail delivery of service to customers. If Comcast owns the physical connection into your home, they should not be allowed to provide the service that flows across that connection.
We have dozens of small, locally-owned Internet service providers that are being slowly squeezed out by expanding DSL and cable Internet usage, but which are not able to get the infrastructure owners to allow them to offer service using the high speed infrastructure.
Back in my dial-up days, I found that the best service available was generally some guy with thirty servers in his garage or perhaps a tiny office somewhere. The big national providers were never responsive to any requests from consumers.
Smaller businesses can compete, and do very well at it, if government agencies will stop bending over backwards to promote the interests of big corporations instead of the interests of individual consumers. Smaller businesses generally give better service and are more willing to make concessions to the needs of the individual.
Government got us into this situation. Government will have to get us out.
