inaugural address

Barack Obama’s ‘Digital Lines’ to Nowhere

by Ryan Radia on January 20, 2009 · 4 comments

in Deregulate to Stimulate, Features, Stimulus to Nowhere, Tech & Telecom, Zeitgeist

So spoke President Barack Obama in his inaugural address today:

“We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.”

When Obama said this, he was no doubt referring to his stated goal of having government build out broadband networks on taxpayers’ dime. The massive $825-billion stimulus package unveiled in Congress last week devotes $6 billion to build out broadband to areas where high-speed online connectivity is sparsely available.

Providing private goods like broadband Internet access is a task best left to private enterprise. As Obama himself noted only a few moments earlier in his address:

“It has been the risk-takers, the doers, the makers of things…who have carried us up the long, rugged path towards prosperity and freedom.”

Unfortunately, it seems that President Obama does not fully understand the true meaning of this line. If he did, he would realize that the very risk-takers he lauds are the ones who ought to be tasked with building the “digital lines” that “feed our commerce”.

We rightly rely on government to provide public goods such as national defense, dispute resolution, and the enforcement of property rights. We rely on the private sector, however, for nearly everything else. In an open marketplace, competing firms take risks, investing in business ventures with hopes of earning a profit by selling goods and services above cost. Demand is met with supply, and consumers enjoy the goods and services they desire at prices that aren’t too high.

Broadband is not a public good, and government should not be in the business of funding the development of networks for private use. Investment in broadband in the U.S. today may be below the socially optimal level, but this is the case because of too much government involvement in the marketplace, not too little of it. Moreover, it is not at all clear that government has any better idea than the marketplace how much investment in broadband is socially ideal.

To be sure, spending billions of taxpayer dollars may well mean faster and more widely available broadband access in America. To make this happen, however, capital would have to be reallocated to government from other, likely more productive uses. $6 billion spent on broadband at government’s whim necessitates $6 billion in additional tax revenue, which must come from the pockets of private firms and individuals. For government to spend the funds on delivering a service that the market has deemed unworthy—specifically, fiber optic connectivity to homes across rural America—would deny private entities the ability to spend or invest that $6 billion as they see fit.

Residential broadband access is hard to come by in many rural and low-income areas, and many unserved consumers would love it if firms were to provide high-speed Internet in their neighborhood. Many of these people value broadband considerably as a tool of commerce, communications, and entertainment—or at least they say they do when asked—yet in many cases, private businesses have decided against laying out the funds needed to build out fat-pipes to these areas.

Is the state of broadband access in rural areas proof of market failure? Hardly. What it actually suggests is that, while some unserved individuals clearly desire broadband, residents of underserved communities don’t value broadband enough overall to make it worth deploying. This signals to private firms that in some regions, building fat pipes to every home is an unwise use of limited funds. Instead, these firms allocate their scarce resources to other pursuits—ones which consumers actually value enough to justify an initial investment.

What of claims that the U.S. is lagging behind foreign countries in terms of broadband speeds across? While these reports may hold some truth, they’re hardly cause for alarm. After all, different countries have different characteristics—not just geography and population density, but consumer preferences as well. It’s quite possible that some of the nations with speedier broadband than America actually suffer from too much investment in broadband—and that their economies have suffered as a result. Like telecommunications firms in Japan, which over-invested in building out high-bandwidth fiber optic networks, some nations that currently surpass the U.S. in terms of broadband connectivity may well have harmed their economies on net by misallocating funds. The fact that the average U.S. worker is still more productive than the average worker of any nation with government—funded broadband is a testament to the fact that we can use capital efficiently without embracing a command-and-control approach to broadband.

Obama Inaugural Speech Spurns Notion of Apologizing

by Christine Hall on January 20, 2009

in Energy, Environment, Global Warming

Listening to President Obama’s inaugural address today, I was struck by his rhetoric with respect to “apologizing for our way of life.” It was a bit unclear, but hopefully he was referring, not only to threats to our national security, but to energy consumption — the notion that we (Americans, westerners) should not apologize for the energy we consume, which enables us to live better, more productive, healthy lives.

With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet. We will not apologize for our way of life, nor will we waver in its defense, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you.

As my colleagues have noted, many of Obama’s energy and environment appointments have a long track record of supporting anti-energy policies, such as renewable energy mandates, that drive up energy costs for the rest of us. But, for a moment, it would be nice to think that our new president doesn’t want us to apologize for the energy that empowers all of us to live better lives.

The Daddy Knows Best Inaugural Address

by Iain Murray on January 20, 2009 · 20 comments

in Energy, Global Warming, International, Nanny State, Politics as Usual, Sanctimony, Stimulus to Nowhere

Fatal conceit alert! Here’s the text of the Inaugural Address, with some comments from your humble servant.

For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act – not only to create new jobs, but to lay a new foundation for growth. We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. And all this we will do.

Obama already shows that he does not understand infrastructure. The grids – roads and electric grids and so on – only work if the flows – cars and energy – are allowed to flow freely. And flows only work if the grids are sufficient to allow them to flow. This is why liberating or constructing grids is of no help if you restrict the flows, and vice versa. An electric grid designed to meet the demands of the next 30 years will be of no help if we restrict ourselves to the false promise of solar and wind power, which cannot possibly provide more than a tiny fraction of our energy at current – or foreseeable – technology. Similarly, what good is a road network if we restrict our cars to a range of 40 miles? A proper approach to infrastructure liberates both. The best government can do for infrastructure is actually to get out of the way. NEPA reform is essential.

As for “science in its rightful place” – I hope so! Something to inform, not dictate policy.

And “soil” – does that mean nuclear?

Now, there are some who question the scale of our ambitions – who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage.

What the cynics fail to understand is that the ground has shifted beneath them – that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works – whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public’s dollars will be held to account – to spend wisely, reform bad habits, and do our business in the light of day – because only then can we restore the vital trust between a people and their government.

Ah, a classic obfuscation deployed against the “cynic” – that’d be me, a loyal follower of Diogenes the Dog. “Big plans” are the fatal conceit. “Big works” we could and can handle. There is a big difference. As for the question of the size of government, the most important insight of liberalism is that government that “works” is often still harmful (see J.S. Mill, passim). The tyranny of the majority works for the majority, not the minority. That’s why government has to be limited as a moral imperative, never mind the mountain of economic evidence in favor of limited government.

Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control – and that a nation cannot prosper long when it favors only the prosperous. The success of our economy has always depended not just on the size of our Gross Domestic Product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart – not out of charity, but because it is the surest route to our common good.

The market has self-limiting devices to prevent it spinning out of control, but too often government regulates against them. It can also be spun out of control by government pushing it too hard in the wrong direction, as happened here, both in the UK and US. I do have to agree with him on opportunity, however. Opportunity is at the base of resiliency and adaptation to circumstance. What we cannot do, on the other hand, is guarantee opportunity, for that by its very nature reduces resiliency. Instead, we must have institutional reform to allow people to make the most of what they have, whether their resources be modest or ample. Property rights, rule of law, the market, many others – all are institutions that allow opportunity and which government has weakened.

…roll back the specter of a warming planet. We will not apologize for our way of life

Interesting juxtaposition. It would be nice if he meant it. Moreover, the use of the word specter is appropriate – a terrifying fantasy that exists only to frighten naive people.

To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds. And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to suffering outside our borders; nor can we consume the world’s resources without regard to effect. For the world has changed, and we must change with it.

Again, I agree completely with the professed end, but the means by which he hopes to achieve it contradict the end. Artificially restricting energy access on a global basis will keep the poor in poverty and guarantee suffering outside our borders. That is why we need a different approach.

I’ll pass over the cant and the security issues, and end by commenting on a misinterpretation of George Washington:

“Let it be told to the future world…that in the depth of winter, when nothing but hope and virtue could survive…that the city and the country, alarmed at one common danger, came forth to meet [it].”

Notice the subject and the voice. The people came forth voluntarily. they were not commanded by a government or leader. Thomas Paine is asking his compatriots to help, but no government forced it – indeed, that is the point of the request, that it should be said that people did it voluntarily. And respond they did. They sprang forth from their farms and homesteads to see off a tyrant whose list of abuses to their ancient rights and freedoms served as an affront to their heritage and liberty. There was no fatal conceit in the creation of America, rather a reaction against it. [This paragraph has been edited to correct a misrepresentation. See comments.] That is why the misunderstandings, contradictions and wishful thinking embodied in this inaugural address will be no more than a footnote in history.