Five Principles Conservatives Lost In The Net Neutrality Fight

Allan Stevo Writer, 52 Weeks in Slovakia
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After an excellent CPAC this year, I woke up after the last day and had a rough morning. The difficulty was based on a disheartening conversation I was having with a 26 year old attendee who was passionate enough about his values to drive twelve hours to be at the annual conservative Super Bowl.

Based on our discussion, it was obvious that the 26 year old didn’t understand markets. He was dedicated, well-intentioned, and smart, but that meant little in this discussion, because he didn’t have the philosophical framework to understand the workings of markets and the shortcomings of the trendy perspective on Internet regulation.

It occurred to me, if our most passionate, brightest, and best conservative minds gathered at CPAC didn’t have a solid understanding of the market, then I couldn’t expect anyone to really have a solid understanding of the market. Has America failed to raise a generation that understands its greatest treasures?

Free market capitalism is the greatest force in improving the quality of life in America and the world. If that understanding is not bequeathed we lose that next generation to the thinking of central planners.

In the so called “net neutrality” debate, the well-intentioned idealist is proven a ninny. Unless a person represents an entrenched corporation or seeks to limit the Internet, there is no reason to support net neutrality. There is literally no economically sound argument for it.

Net neutrality was a conservative, Tea Party, and liberty movement victory to win, because those are the segments of U.S. society that overwhelmingly recognize “that government is best, which governs least.” Having lost, it’s important to reflect on what we’ve lost.

1. Central Bodies Can Never Understand as Much Information as the Price Function of the Market Can Synthesize

No single person is capable of processing all the information calculated in the price of a mere pencil. The price a pencil sells for incorporates the cost of graphite in Canada, the cost of labor in Vitenam, the realization that it’s time to build a new pencil factory, the cost of fuel from Venezuela, while also incorporating the momentary preference of the local newspaper stand for money instead of that pencil along with literally thousands of other calculations that exist in that moment including the financial situation of the 7 year old customer on her way to school. We have yet to develop a system for incorporating and conveying all of this information that trumps freely fluctuating free market prices. The more regulation exists in industries as diverse as the pencil providers or Internet service providers, the less effectively this information can be conveyed through pricing. The price mechanism is an important pipeline of information that is very bad to close down.

2. Human Development is Stifled by Government Intervention

All humans have wants. All humans have challenges. In a market economy, the profit motive acts as one incentive among many to encourage entrepreneurs to help overcome human challenges. Overcoming challenges people have is also referred to as helping people. The free market is an effective way to encourage the helping of other people, precisely because the market is a very effective way of identifying what human wants exist and providing for those wants while creating very profitable incentives for those who provide what others want. Reducing that profit motive — through taxation or regulation — tends to have the effect of reducing innovation. Ultimately, taxes and regulations discourage people from helping others in the most effective and voluntary way our society has developed for helping others.

3. When a Company Fails Its Customers, It’s Replaced

Many imaginary scenarios about net neutrality exist: “What if company X does Y to consumer Z?” Disregarding the fact that extreme hypothetical scare tactics have little place in rational discussion, it’s important to remember that free markets encourage competition. A company that fails its customers is likely to lose its customers to a competitor.

4. Consumers and Entrenched Businesses are Seldom on the Same Side

During my discussion with the well-meaning 26 year old CPAC attendee, I was told that “net neutrality is one of the few issues in which individuals and corporations are on the same side.” Individual consumers and entrenched corporations are seldom on the same side. Contrary to popular opinion, entrenched interests regularly seek new regulation to further cement their marketshare and reduce competition from upstarts. A consumer would tend to want the exact opposite: more competition reducing prices and inspiring innovation to provide value to an increasingly large market share. This theory is sound across all economic areas from money to steel to bandwidth to natural gas. A great deal of money is spent reframing anti-competitive legislation made to benefit political contributors so that it appears as “consumer friendly regulation.” Anticompetitive crony legislation by any other name remains just as terrible.

5. The Internet Is Not Unique

Idealists in the net neutrality debate inaccurately argue that the Internet is unique and must be “protected.” Certainly the internet is special, but not unique. All products and services demanded by humans function in very similar ways and are most effectively distributed through a mechanism that is as close to the free market as possible. Pretending the Internet is different will cause the relatively free Internet to look a lot like the American healthcare system or the postal system, areas of the economy that some people also erroneously consider unique and thereby attempt to remove from effective market methods of product and service allocation. Anti-competitive crony legislation does not protect an industry or a technology; it tends to cement in place the otherwise temporary market leaders in an industry.

All in all, any government imposition on a free market and a free people is a tremendous loss. This is especially true when it comes to the Internet: the greatest extension of human freedom in a millennium. Through market mechanisms human society is benefitted; the more people that recognize those mechanisms, the better off we are as a society.