The Myth of the Libertarian Internet

A blog about business and economics.
July 24 2012 9:06 AM

The Myth of the Libertarian Internet

Imagine a world in which airplane technology was advancing rapidly but digital communications technology was stagnating. I think libertarians would have a ready explaination. Aviation, though hardly unregulated, is supervised by the government for basic safety of operations and then firms and inventors are allowed to roam freely. The Internet, by contrast, is a cesspool of government intervention. Rather than founded on the independent spirit of the Wright Brothers, the Internet is literally the bastard offspring of a government civil defense program and European physics research consortium. The Internet consists of a bunch of wires that need to be run underground, generally under city streets, ensuring that construction can only happen with the cooperation of local political officials. The cable and telephone companies who provide access are regulated by both state and federal governments, often with inconsistent and overlapping schemes.

Software is a jumble of overlapping copyright and patent monopolies, mobile broadband only exists according to the whims of FCC spectrum auctions, and the basic vitality of the sector is consistently undermined rather than bolstered by a succession of Democratic and Republican administrations' efforts to create a pro-tech industrial policy to boost Silicon Valley as a national champion.


In aerospace, by contrast, the skies are wide open and free and U.S.-based aviation industry competes openly with Airbus, Bombardier, Embraer, and others all around the world. So is it any surprise that since deregulation under Carter and Reagan the passenger aviation industry has thrived while superregulated digital communications technology has become little more than an orgy of lobbying and rent-seeking? I'm not surprised.

The why questions always get immediately ideological. I’m Libertarian, I think it’s because the government has outlawed technology. We’re not allowed to develop new drugs with the FDA charging $1.3 billion per new drug. You’re not allowed to fly supersonic jets, because they’re too noisy. You’re not allowed to build nuclear power plants, say nothing of fusion, or thorium, or any of these other new technologies that might really work.
So, I think we’ve basically outlawed everything having to do with the world of stuff, and the only thing you’re allowed to do is in the world of bits. And that’s why we’ve had a lot of progress in computers and finance. Those were the two areas where there was enormous innovation in the last 40 years. It looks like finance is in the process of getting outlawed. So, the only thing left at this point will be computers and if you’re a computer that’s good. And that’s the perspective Google takes.

Oh wait. This isn't to say that Thiel is wrong, exactly, but I think letting the questions become "immediately ideological" is confusing the issue. It's true that one reason we don't fly supersonic jets is that people find them annoying and so it's generally illegal. But it's not as if the physical infrastructure of broadband Internet can be built without government permission either. So one question you might ask is why. Is supersonic jet technology unimpressive because the voters wouldn't give it permission to become impressive, or did the voters not feel like giving it permission because it wasn't very impressive? Self-driving cars face a lot of potential regulatory hurdles, but as best I can tell jurisdictions are generally moving to welcome them precisely because the technology seems genuinely impressive.

One of the nice things about "the government" is that there are different governments in different places, so when outcomes are due to government policy you should expect to see them vary from place to place. The most advanced passenger rail technology, for example, exists in places (France, Spain, Japan, China) where the government has decided to deploy it but not elsewhere. Self-service gasoline doesn't exist in New Jersey because of a specific government policy, just as you can buy takeout beer at a bar in Pennsyvlania but not most other states because of specific government policies. The state of broadband infrastructure does indeed vary considerably from place to place largely because public policy varies. Some drugs that are prescription-only here are widely available abroad , but to the best of my knowledge there are no mind-blowing Japanese miracle cures that the FDA is keeping from our shores.

But the basic fact that computers have advanced a lot and passenger aviation has only advanced a little is a global constant. Even where super-sonic jets were allowed on the transatlantic routes they were a commercial failure. Perhaps if they'd succeeded the politics would have changed and they'd have been allowed more broadly on overland routes. But if you commit yourself in advance to an rigid ideological identity then cause and effect start to look much simpler simpler than they really are.



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