How Can the Stimulus Plan Help the Internet?

Wired is running an article raising the question of how a US economic stimulus plan could best help broadband adoption and the internet in general. We discussed President-elect Obama's statements about his plan, which would include investments in such areas, but Wired asks how we can avoid the equivalent of the New Deal's "ditches to nowhere" without more data about where the money would actually make a difference. Quoting: "... the problem is that no one knows the best way to make the internet more resilient, accessible and secure, since there's no just no public data. The ISP and backbone internet providers don't tell anyone anything. For instance, the government doesn't know how many people actually have broadband or what they pay for it. ... In September, the FCC found that its data collection on internet broadband was incomplete and thus ruled that AT&T, Qwest and Verizon could stop filing some reports — because the requirements did not extend to cable companies, too."

Comments

Premise guarantees failure

[MSTCrow5429]

Central planning will always lead to ditches to nowhere. Without an ability to perform rationale economic calculations, an economy cannot function. Any effort by the State to manipulate or direct economic planning will lead to increasing economic irrationality and inefficiency. The only way to maximize the efficient use of resources is to remove government coercion from the marketplace, and let voluntary cooperation and aggregate individual choices locate the closet to optimally possible solution to any problem.

Re:Premise guarantees failure

[Rinisari]

Exactly. The consumer will direct the market based on the availability of competing, cheaper services.

The $200 billion that the telecoms got in the 1990s to wire America was squandered, and very little was actually done with it (arguably kept prices for existing services at the same level instead of having them go up, but not more than that).

This is where municipal government--boroughs, villages, city sections--could play a hand in essentially buying groups--"aggregate individual choices"-- for broadband service, but still allow residents to choose their own provider.

Re:Premise guarantees failure

[Timothy Brownawell]

Central planning will always lead to ditches to nowhere.

[citation needed]

Without an ability to perform rationale economic calculations, an economy cannot function. Any effort by the State to manipulate or direct economic planning will lead to increasing economic irrationality and inefficiency.

The perfect efficiency that markets try to approach is short-sighted (this also makes them unstable, with a tendency to collapse to monopoly/oligopoly). Some diversion of resources towards longer-term goals is useful, why do you think any country has a public education system?

The only way to maximize the efficient use of resources is to remove government coercion from the marketplace, and let voluntary cooperation and aggregate individual choices locate the closet to optimally possible solution to any problem.

You also have to eliminate all other forms of coercion and tying and collusion, and provide everyone with perfect information and zero transaction costs. And you still end up with that short-sightedness.

Re:Premise guarantees failure

[sjames]

Yeah, I don't know why they don't just dynamite that useless Hoover Dam and those useless interstates.

I fully agree that a centrally planned economy doesn't work well, but that doesn't mean that centrally planned projects or public works don't work. Sometimes when a market settles into a local minimum, only a swift kick from outside can get it seeking an optimal solution again.

Another case for a public project is when the market players are too localized. The telecomms will never in a bazillion years sacrifice even a fraction of a percent of their profit even if it would double the profitability of every single player in every single market but theirs. Not even if after 5 to 10 years it would probably come back and double their profitability as well (you see, a voluntary loss of .0002% profitability wouldn't look good on the quarterly report).

One of the axioms of any market based economy is that entities ALWAYS make rational economic decisions. I have my doubts. Actors in the economy mostly make knee-jerk heard mentality decisions.

It may be that a market solution IS better in this case, but 'market=good, public work=bad" is not a reason, it's an unsupported conclusion.

The best way to help...

[LynnwoodRooster]

...is to get rid of the whole "stimulus plan" to start with. Lower taxes rather than collecting them and redistributing to chosen pet projects (with an appropriate cut for the voracious appetite of Government to waste).

Re:The best way to help...

[isdnip]

Then, when the Second Great Depression leaves a 40% unemployment rate, you and your few remaining rich friends with their inherited cash and other still-liquid assets will have a really easy time getting lots of servants to work for you for a pittance!

Re:The best way to help...

[jwiegley]

So you suggest that instead I be punished for managing my affairs well?

For saving my money, for doing my investment research, for planning my retirement, for getting good grades, for sticking with jobs, being competent and all the other items that I put personal effort into making my finances secure I should pay for other people's mistakes? That I should shoulder a larger tax burden than another man? I should be legally coerced to support and fund organizations and corporate strategies that I fundamentally disagree with? Is that it?

People that think that's better is why we're in this problem in the first place.

See my sig and learn a lesson.

Re:The best way to help...

[An Onerous Coward]

It's very lazy or stupid of you to assume that the poor are poor because they are lazy or stupid.

It's also lazy or stupid of you to attribute these fishy statistics to the New York Times. What you linked to was actually a book excerpt that the Times merely reprinted. They would be more appropriately attributed thusly: According to "The Millionaire Next Door: The Surprising Secrets of American's Wealthy" authors Thomas J. Stanley, Ph.D and William D. Danko Ph.D...

But two random doctorates who wrote a book congratulating millionaires for being millionaires just doesn't have the same ring of progressive credibility as "according to the New York Times," does it?

Regardless of the statistics you cite (which are cherry-picked, and may or may not be properly collected), it doesn't change the fact that sociologists cannot find a better predictor of a person's socioeconomic future than their parents' socioeconomic background. It's a stronger predictor than race, gender, IQ, or scholastic achievement (individual or parental).

It's also true that the highest performing children of poor people graduate from college at approximately the same rate as the lowest-performing children of the wealthy. I don't remember exactly how the statistics broke down, but it was something like being in the most talented 20% of all children in the lowest income quartile gave you about the same graduation rate as being in the least talented 20% of children in the highest income quartile.

Being the idiot child of a rich person is a more secure route to success than being a bright and talented child of a poor person. In such a society, chalking your own success up to hard work and everyone else's failures up to stupidity is a cruel and narcissistic sort of stupidity.

Demand Side Economics

[pilsner.urquell]

How Can the Stimulus Plan Help the Internet? It can't! Already more money has been dumped into this stimulus plan that has been spent on all the major wars this country has fought.

Demand side economics is not the right solution at this time.

Internet Question on the Census

[kabloom]

It's time to start lobbying for an internet question (or two) on the census.

What?

[canuck57]

.. the problem is that no one knows the best way to make the internet more resilient, accessible and secure, since there's no just no public data.

I dispute that. The internet is a collective effort by many technical people past and present that develop it's potential. The only hinderance is politics, useless patents, corporate monopolies and the like. It is a truly free media, unencumbered by undue influence by anyone or any special interest group.

Keep the internet free, and it will serve mankind very well. The interent does not need stimulus, it needs net equality of access not dominated by any one.

Any solutions for reliability, useability will be provided as needed. Very efficient model too. For example, it does not depend on any one operation system for it's existance, even though some would have it otherwise. Maybe even open up some of that TV channel bandwidth for the internet without the ownership and licensing issues, allowing any company to provide WAN access.

The internet is truly a democratic collective. Work with it and don't let secular forces pervert it. Doesn't cost much either to do this.

Stop Telecoms and Cable Cos from Squandering it.

[Zombie Ryushu]

Right now, we have a serious problem with Telephone companies and cable companies attempting to squander and rip apart the Internet. The Internet would only continue to expand and new innovations would take root. But the problem is that local monopolies are standing in the way of that. There are entrenched intrests on many sides that want to fragment and censor the Internet, and people are too lazy and stupid to stand up and protest these actions. Its not government regulation thats the problem, and its not the "free market libertarians" that are the solutions. Its a couple of very corrupt, very ARROGANT shareholders that need to go to PRISON for what they are doing.

The Internet like Water, like Electricity, is becoming a public utility, it should be transparent in an transparent manner like one. And to the Cable Cos and the Telcos, no its not your network anymore.

Re:Look CEOs

[burnin1965]

You miss the point - delivering the Internet to conumers is only profitable for a company if they are a near-monopoly. Having a couple of customers here, a couple there doesn't work - there are labor-intensive resources that are tied to geography. Like fixing wires when they break.

Wow, you pulled all that out of the AC's post? You can definitely read more between the lines than I can.

Anyhow, the facts disagree with your belief that a monopoly is required to be profitable. I'm not surprised by this as you are among the majority who have either lost faith in free market and competition or never believed in it in the first place.

In reviewing the latest 10Q SEC filing for Comcast and AT&T, two opponents of net neutrality who arguably are engaged in a competitive market for broadband internet, they are making a tidy profit on their internet operations.

Comcast had an operating income of $1.7 billion after expenses, depreciation and amortization on revenue of $8 billion for their cable segment for the last 3 months.

AT&T had an operating income of $2.7 billion after expenses, depreciation and amortization on revenue of $17 billion for their wireline segment for the last 3 months.

And so the battle goes on and on. Each side offering better numbers (speeds, etc.) and lower prices - utterly unsustainable prices that make no sense but designed to capture market share. Once the competition is eliminated prices can return to that which actually pays for the service, but not until.

Welcome to the free market where ROI includes risk. It is sustainable and works for many other industries. Take a close look at electronics manufacturers, probably the most cut throat competitive industry around. Electronics manufacturers compete, some win some fail, the market continues and consumers get awesome products at great prices. When competitors lower their prices below sustainable levels in an attempt to gain market share and drive competitors out of business they are breaking the law, very much like breaking the law when competitors scheme to fix prices or use other illegal tactics to build or maintain monopoly positions so they can gouge consumers.

Another side effect of this is the consumer isn't paying for access

See the SEC reports, consumers are paying, providers are profiting. Reality trumps theory.

especially when you can get a DSL connection for $14.95 a month

That would be awesome! :) Unfortunately you picked the minimum data point for broadband access with nothing to explain exactly what you get for $14.95, the truth is that average broadband access rates are $53.06/month in the United States.

Think people are comfortable with the idea that the current ISPs are running at a loss and just hanging on with the hope of driving everyone else out?

Please, read some of the financial statements for the corporations who are fighting net neutrality and who want to tax other companies who profit by providing valuable services over the network the ISP is already profiting from.

Then you propose extermination

[SuperKendall]

Existence of rampant corruption is is not a reason to discard economic theories... Get rid of the corruption and try again.

So your proposal is to eliminate all human life, for as long as you have humans by any definition of "human" we have now, you will have corruption.

If you want to eliminate rampant corruption, you should try compartmentalizing the potential damage from the corruption of one person, and that means elimination of central planning where power naturally coaleses into the hands of a few.

Any other notion of merely "eliminating corruption" by pretending any group of humans can be trained to not be corrupt - well that's just a fantasy that ignores all of human history and observation.