infrastructure

Infrastructure Si, Infrastructure Bank No

by Ivan Osorio on September 15, 2011

in Deregulate to Stimulate, Economy, Energy, Tech & Telecom

In his Forbes column, James Glassman provides a counterpoint to the Obama proposal to create a national infrastructure bank. Rather than direct funds through a new federal bureaucracy, he proposes, government should lift the barriers that are holding back private infrastructure investment.

[T]two of the largest prospective infrastructure investments in America are being blocked, or at least delayed, by government. One would result from the merger of AT&T and T-Mobile, which I discussed earlier on Forbes.com. The merger would accelerate deployment of a nationwide LTE 4G wireless network that would bring high-speed broadband to 97 percent of Americans.

The second investment involves energy. Wood Mackenzie, a consulting firm, recently released a report that showed that if the U.S. government allows further sensible energy development projects to go ahead, the results of building and benefiting from the new infrastructure would be over 1 million new jobs by 2018 and over $800 billion in extra government revenues by 2030.

Part of the problem is President Obama’s steadfast clinging to the notion of government spending as job creator. Obama unwittingly revealed the failure of that vision, as Glassman notes.

In his speech to a joint session of Congress, President Obama outlined a different set of taxpayer-funded infrastructure spending:

“The American Jobs Act will repair and modernize at least 35,000 schools.  It will put people to work right now fixing roofs and windows, installing science labs and high-speed Internet in classrooms all across this country.  It will rehabilitate homes and businesses in communities hit hardest by foreclosures.  It will jumpstart thousands of transportation projects all across the country.”

The problem is that, no matter how well-meaning such projects may be, spending on them will be determined by political considerations.

The politicized nature of an infrastructure bank is underscored by the fact that, as The Bond Buyer notes today, “The bank would be run by a chief executive officer and a seven-member board of directors, all of whom would be appointed by the president and confirmed by the Senate.”

Another problem is that, if Obama’s remarks are anything to go by, none of the projects he mentions (except for the passing mention of his bill’s intent to “rehabilitate homes and businesses”) has much wealth-creating potential. He seems more focused on handing out more government contracts than on giving businesses the freedom to grow — and hire.

Infrastructure always needs money, but the choice is not funding si o no, but over which is a better way to provide funding over the long term: increasing direct government spending — and  the cost of government on the private sector with it — or allowing businesses to flourish and therefore expand the tax base, by keeping taxes low and regulation light.

Is the Internet’s Future in Jeopardy?

by Ryan Radia on October 6, 2010 · 1 comment

in Tech & Telecom

Last week, I had the pleasure of discussing net neutrality with James Boyle, a Duke Law Professor and the co-founder of the Center for the Study of the Public Domain, and Paul Jones, the director of ibiblio, on WUNC’s The State of Things radio program. Our hour-long discussion touched on a number of important tech policy topics, and I highly recommend giving the show a listen (download the MP3 here) if you’re interested in hearing the insights of two very thoughtful scholars and critics of cyber-libertarianism.

I’m a big admirer of Boyle and Jones, who’ve both done a lot of excellent work studying copyright and public domain in the information age. While I don’t share their views on the merits of net neutrality regulation — or, perhaps, of government regulation in general — there’s much common ground between us on many issues, including intellectual property, free speech, and government surveillance.

For folks who don’t want to spend an hour listening to our discussion, I’ve typed up a brief summary of the questions we attempted to tackle in our discussion and the various arguments we raised. My apologies if I’ve mischaracterized any arguments or statements — if you want to know what was actually said, go listen to the whole interview!

  • What role should government play in regulating the Internet? I argue its proper role is to enforce voluntary arrangements (Terms of Service) and, when appropriate, enforce civil judgments against firms that have broken their promises. Boyle, on the other hand, argues that government should enforce not only contracts but also net neutrality rules because last-mile Internet service is a natural monopoly and consumers often don’t understand what they’re getting, which means that socially desirable contracts aren’t likely to emerge. I respond by citing Thomas DiLorenzo’s critique of the natural monopoly hypothesis and pointing out that government has obstructed ISP competition by allocating spectrum inefficiently and imposing excessive costs on wireline ISPs through burdensome rights-of-way and franchising rules.
  • Why did Google retreat on its commitment to net neutrality in joining with Verizon to exempt wireless services from neutrality? Boyle argues it’s because Google realized the future of communications is mobile and believed it needed to compromise with Verizon (America’s biggest wireless carrier). Jones points out that the Google-Verizon proposal isn’t a business agreement, but a compromise designed to address the conflicting interests of various stakeholders. I argue that Google recognized that government discrimination among competing business models and platforms is a greater danger to consumers than provider discrimination, and that innovation truly occurs when ‘walled gardens’ such as the iPhone co-evolve with open platforms like Android — the “Yin and Yang” of innovation, as Bret Swanson puts it). Boyle argues that proprietary platforms and exclusionary deals between content and service providers preclude disruptive innovation and digital generativity. He cites the financial crisis as an example of inadequate regulation resulting in poor outcomes that might have not have occurred had there been greater oversight.
  • Does collusion among large, powerful Internet corporations help or harm consumers and innovation? Jones cites Adam Smith’s The Wealth of Nations in arguing that, without government regulation, mega-corporations will collude and carve up the marketplace, hindering innovation and progress. I argue that leaving companies free to try to “carve up markets” actually spurs beneficial competitive responses and promotes destructive market entry, even if the process isn’t always pretty. I argue that the forces arrayed against today’s major companies–competitors, consumers, suppliers, downstream partners–make it impossible for any entity or group of entities to engage in any truly abusive practices without suffering harsh punishment.
  • Will entrepreneurs and innovators even be able to get off the ground if corporations have unlimited control over Internet applications and content? I argue that government policies, such as the DMCA’s anti-circumvention provisions, are a major part of the problem because they distort natural market outcomes and prop up bad business models. Boyle agrees that these provisions are seriously problematic, calling DMCA a “lawyers’ full employment act.” He points out that many of the most important innovations of the last couple of decades — Google, Facebook, Twitter, and so forth — came about precisely because of the Internet’s openness and dynamism. I argue that the openness that characterizes the Internet is indeed desirable in many ways, but that voluntary institutions can offer open platforms without being forced to do so by government. I point out that network operators who hinder the value of the content that traverses their pipes do so at their own peril, and that infrastructure and content companies actually have a symbiotic relationship, rather than an adversarial one. Jones argues that because many ISPs are also content companies, they have an incentive to privilege their own content at the expense of competing offerings. I point out that consumer demand for Internet video outlets (i.e. YouTube and Hulu) deters providers from slowing down Internet-delivered content. Boyle argues that the continued existence of the open Internet is crucial in ensuring that the ‘walls’ that enclose walled gardens don’t grow too tall.
  • Shouldn’t we treat the Internet like a public utility — a road on which all can travel? I argue that treating the Internet like a public utility, like we already treat roads, raises the dilemma of the tragedy of the commons. I point out that many private roads already exist today without the ‘tollbooths’ that neutrality advocates fear. Jones points out that the real tragedy is one of unregulated commons which lack adequate rules. Boyle argues that the economics of physical property (scarce goods) cannot readily be mapped to networks and calls the Internet a “comedy of the commons” (borrowing from Carol Rose). I argue that government-run commons have a poor track record, from highways to the wi-fi band, and that the success of network industries requires smart investment and innovation that government isn’t well-equipped to deliver. Boyle argues that not all resources must be owned if they’re to be efficiently utilized, citing the emergence of free trade with India and China in the 1700s and the subsequent collapse of state-chartered trading monopolies. Boyle argues that tomorrow’s “next great thing” may never emerge if the openness of today’s Internet isn’t enshrined in regulation.

Iain Murray on the Anti-Stimulus

by Richard Morrison on February 12, 2009

in Deregulate to Stimulate, Economy, Stimulus to Nowhere

On behalf of my distinguished colleague Iain Murray, who is busy speaking at a very important press conference this morning, let me present his prepared remarks on the impending stimulus bill:

Remarks of Iain Murray, Director of Projects and Analysis, Competitive Enterprise Institute

Good morning. Others have already told you what an unutterable waste of money this so-called stimulus package is. I just want to make two points. First, that the American people have been misled about the nature of the bill, and been sold a pig in a poke. Second, that if you really want to stimulate economic activity, there is a very simple way to do it that doesn’t cost a penny; we call it “liberate to stimulate.”

The American people were told that this bill would give Americans jobs as a result of great public works projects. It won’t. Congress and the Agencies have between them made it very difficult to undertake great infrastructure projects, and impossible to do it quickly. That’s why almost all the supposed “shovel-ready” projects in the bill are maintenance projects and the like. If you thought Americans would be building roads, only 3 percent of the Senate stimulus package is for roads. Only 7 percent is for new infrastructure in general.

As for so-called “green energy,” the much-vaunted aim of doubling alternative energy can be achieved by business-as-usual, so little energy is provided by wind and solar. My colleague Jonathan Tolman and I also worked out that the House bill contains just about $6.4 billion aimed at creating “green jobs,” and only 70,000 would be created. This bill is not what was advertised.

So how can we stimulate the economy? As I mentioned, Congress has made it very difficult to build infrastructure. It needs to lift those restrictions. Gov. Schwarzenegger and three former California governors have all complained about the restrictions of the National Environmental Policy Act causing misallocations of infrastructure funding. Those restrictions need to be removed, as Gov. Schwarzenegger has asked. Similarly, we need clean electric power, and we need large amounts of it, but it takes ten years or more to break ground on a nuclear power plant. If the regulators sped up the permitting process like they’re doing in the UK, then we could get moving on new nuclear build very quickly. Those sorts of reforms don’t cost anything, and can get America back to work, which is what we all want to see.

Check out more on the topic under the “Deregulate to Stimulate” category.

Davis-Bacon from the Pork Barrel

by Ivan Osorio on December 29, 2008

in Economy, Regulation

In today’s Wall Street Journal, the Brookings Institution’s Clifford Winston points out some critical pitfalls likely to face the infrastructure spending element of President-elect Obama’s “stimulus” plan:

One of the biggest killers of all is that states insist on allocating federal transportation funds through a politically devised formula. The result? Smooth, well-paved rural highways and worn-out urban roadways that are paved with a layer of asphalt too thin to withstand heavy use and are therefore in need of excessive, costly maintenance.

But don’t blame the states for all the inefficient use of highway dollars. Federal regulations have also inflated the cost of providing roads, trains and so much more for a public on the move.

It takes the nation’s busiest airports decades and billions of dollars to build new runways, for example, because of onerous regulations imposed by the Federal Aviation Administration and the Environmental Protection Agency. Davis-Bacon mandates, which effectively require that “prevailing” union wages (often much higher than the actually prevailing market wage) be paid to workers on any construction project receiving federal funds, also drive up the costs of roads and other federal transport projects. The Federal Transit Act also makes it extremely expensive to lay off transit employees.

Winston is right to point all this out, and he makes some sensible recommendations, including reform of Davis-Bacon. However, reforming the federal infrastructre spending process can only lessen wasteful spending so much, since as long as government is involved, politics will remain a part of the process. (Still, a light touch is too much to expect from Washington, so Obama taking Winson’s advice into consideration is to be hoped for.) For more on Davis-Bacon, see here.

Wealth-Creating Alternatives to Pelosi’s Destructive Infrastructure “Stimulus”

by Wayne Crews on December 3, 2008 · 5 comments

in Bailout Watch, Bureaucrash, Economy, Energy, Environment, Global Warming, Nanny State, Personal Liberty, Tech & Telecom, Trade

Well, who can possibly be surprised by the revelation that “The federal government’s economic stimulus package will include investment in broadband Internet infrastructure and funds to upgrade and repair the national power grid alongside more traditional funding for road and bridge repair.”

Details, as usual, do not exist, other than the obvious golden chains that come with power grid investment: get the cash, but throw it away on inferior “renewable” investments, thereby draining future wealth and resources (for example, no fuel is “greener”—in the proper sense of the term of using fewer overall resources—than petroleum based gasoline). Meanwhile, government power over energy grows.

Labor groups are not merely being placated with the package but helped spearhead it (they insist “millions” of jobs will be created). This helps assure that future generations will see more fiascoes like the disaster in the current auto industry—yes, tomorrow’s productivity will improve, but the workers who are sent home still get paid (that’s the auto industry’s actual problem).

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