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Thom Stark on Private Enterprise   5 comments

Thom Stark

Thom is back from his adventure, responding to my post from last week.


I think we’ve pretty well beaten the subject of who’s responsible for the American Civil War to a bloody, unrecognizable pulp. It seems clear that we fundamentally disagree on the issue: you see it as a product of Lincoln’s intransigence on secession, while I see it as the result of Southern bellicosity and the irrevocability of membership in the Union.

So be it. Let us agree that we will disagree, and move on.

The example you give of Federal heavy-handedness is an interesting one. I can’t and won’t defend the NTSB’s refusal to grant a waiver from its PTC requirement for the Fairbanks-Seward line, but I will note two things: first, that your complaint is really about bureaucratic inflexibility, rather than Federal power, and secondly, why aren’t your Senators and Representative using their influence to force the NTSB to be reasonable? That’s part of their job – and an important part, at that.

The thing that most struck me about your essay, however, was the way you dismissed the battle between Chattanooga and Comcast over gigabit Internet access. I think you have completely mischaracterized the conflict as Chattanooga “interfering” in Comcast and AT&T’s market. The fact is that neither Comcast nor AT&T had ANY plans to build out a fiber-based physical plant in the greater Chattanooga metropolitan area at the time when the city decided to build its own. Chattanooga practically begged both companies to build it for them, but they refused, citing high costs and lack of market demand (the same excuses cable companies and local incumbents have repeatedly used to justify not investing in local fiber networks across the country). The city fathers saw ubiquitous gigabit access to the Internet as a keystone in their effort to make Chattanooga a tech hub – and they were entirely correct about that – so they used Federal grant money to help them fund construction of a fiber-to-premises network of their own.

Now the network is in place, and (because the city has no obligation to funnel money into the pockets of shareholders) Chattanoogans have signed up for truly high-speed Internet access in throngs. As a result, Comcast is now fighting to keep from having to build out their own fiber network in the suburbs by getting the Tennessee legislature to forbid Chattanooga to offer to connect its MAN (Metropolitan Area Network) to fiber networks its suburbs want to build. It’s a case where private enterprise is purposefully ignoring market demand in order to avoid investing in fiber to the home, because short-term profits are, somehow, an Unquestioned Good, while supplying the market with the services its demanding is an Unnecessary Expense. And that’s ALL because of state-level protectionism and cronyism which have combined to prevent the entry of non-profit players into the broadband market.

And there, I think, is one major bone of contention between us on which, like the root cause of the American Civil War, we are unlikely ever to agree: you see private enterprise as automatically preferable to government-provided services, whereas I have no such philosophical romance with the ideal of free market capitalism. To me, capitalism is a tool that’s a lot like fire, in that it makes a useful and capable servant, but a poor and loathesome master. In this country, ever since the advent of Saint Reagan, deregulation of capitalism has acquired a talismanic status as an object of worship on the right. The problem I see is that the history of deregulation provides an uninterrupted series of examples of why it’s a Very Bad Idea. Inevitably, government deregulation has led not to a self-regulating marketplace, but to irresponsible gaming of the system for short-term profit, leading inevitably to market bubbles and general economic distress.

Lela Markham Davidson Ditch CorrectedNo less a deregulation cheerleader than Hank Greenspan has admitted that the Federal Reserve, in abdicating its responsibility for fiscal oversight, was ultimately responsible for the crash of 2008 – and that deregulated marketplaces do not, in fact, automagically self-regulate. Instead, they turn into a free-for-all environment where taking advantage of deregulation to generate short-term profits at the expense of individual corporate and marketplace stability is the rule, rather than the exception. Disaster, predictably, follows.

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