Tim Lee

Tim Wu’s “Absurd” Op-ed

Over at Techdirt I respectfully disagree with Adam’s broadside against Tim Wu’s “absurd” piece on the broadband cartel.

Tim Wu’s an ideologically savvy guy, and he’s a master at deploying libertarian rhetoric in defense of not-very-libertarian proposals. I get that, and I’m perfectly willing to call him out when he does so. But in other cases, Wu makes arguments that are just straight-forewordly libertarian. For example, I’m finding it hard to detect the hidden socialist message in this passage:

Our current approach is a command and control system dating from the 1920s. The federal government dictates exactly what licensees of the airwaves may do with their part of the spectrum. These Soviet-style rules create waste that is worthy of Brezhnev.

Many “owners” of spectrum either hardly use the stuff or use it in highly inefficient ways. At any given moment, more than 90 percent of the nation’s airwaves are empty.

Now, as I say in my Techdirt post, Wu would take this line of reasoning in a somewhat different direction than most of us libertarians would. Wu wants to allocate more spectrum to use as a commons, whereas TLFers would generally like to see it allocated to a system of private ownership. But the op-ed isn’t an argument for spectrum commons, it’s an argument against the FCC’s current command-and-control model.

Even if Wu’s article were a brief for spectrum commons, I think we should remember what Adam so eloquently wrote in 2002:

The intellectual battle between adherents to the property rights and commons models of spectrum governance has been a refreshing telecommunications debate for two reasons. First, at the heart of both models is a desire to promote increased flexibility, innovation, and efficient use of the spectrum resource. More important, both groups generally agree that the current command-and-control system is a complete failure and must be replaced. Indeed, both commons and property rights proponents question the continuing need for the FCC in this process at all. Second, and perhaps because of these preceding points, this war of ideas has not been characterized by the rancor typically witnessed in other telecom industry disputes.

Exactly right. So I hope we can dial down the rancor a couple of notches, acknowledge that Wu makes some valid (even, dare I say it, libertarian) points, and engage the arguments Wu actually makes, rather than trying to ferret out the secret agenda lurking behind his words.

July 30, 2008 | Comments |

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    So, let me get this straight. You are rushing to Tim Wu’s defense based on the notion that I am somehow accusing him of a “hidden socialist message.” Is that your point? Well, first of all, I didn’t say that, did I? Nor did I say anything about “secret agenda lurking behind his words.” All I said in my brief rant was that it is absurd for Wu to compare America’s broadband marketplace to a government-run cartel, and that more muni wi-fi like schemes were not going to get us to broadband nirvana.

    Are misguided regulatory policies the cause of many of our current problems? Of course they are, and as you note, I’ve spent many years making that exact point for wireline, wireless, and now broadband markets. But do you really not understand the difference between that and a government-run cartel? A government cartel allows NO competition, NO new entry, NO pricing freedom, and, more importantly, there is collusion at every turn. And yet you say that “Government regulations still impose significant barriers to entry in the telecommunications market” and “That sounds like a "government-run cartel" to me.” Really? Well, I guess we just have different definitions of cartel, then. Frankly, I don’t think many economists would agree with your definition of barriers to entry being the same as a government-run cartel.

    Moreover, when you accuse me of failing to “engage the arguments Wu actually makes,” well, I have been doing just that in countless papers and 1-on-1 debates over the past 5-6 years. Tim and I have always engaged in friendly, but heated, exchanges on these issues. And I never need to “ferret out the secret agenda lurking behind his words” because he is always quite willing to be perfectly upfront about his positions. And they are most definitely not libertarian. Not when he leads the intellectual crusade for Net neutrality regulation. Not when he leads the battle to adopt “Carterfone for wireless.” Not when he is the Chairman of the Board of Free Press, the most unapologetically activist group on media and technology policy issues in the US today. Of course, I suppose you are now going to accuse me of unfairly attacking him for even bringing up these points.
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    Adam, you titled your post "Tim Wu’s 'Mother-May-I' World of Net Neutrality Regulation" in reference to an op-ed that never once mentions network neutrality or advocates new government regulation, and an article in which Wu has a quote saying something you agree with about metering. The muni wi-fi point was one sentence in an op-ed that mostly focused on the fact that government regulations have held back telecom competition. I found it bizarre that you chose to attack that single sentence while completely ignoring the rest of the op-ed, which makes a number of points that virtually every libertarian agrees with. The only way I could make sense of it is if I assumed that you were reading between the lines, advocating "mother may I" regulation without actually saying so.

    I certainly didn't mean to denigrate your excellent body of work pointing out the many problems with Wu's various regulatory proposals. I just think it's important to give our intellectual opponents credit where it's due. So when a scholar writes an op-ed in the New York Times that attacks command-and-control regulation and calls for deregulation, I think that's something to celebrate, even if the author happens to be a left-winger.
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    Wu complains about a "command and control system [that] dictates exactly what licensees of the airwaves may do with their part of the spectrum. These Soviet-style rules create waste that is worthy of Brezhnev."

    Yet he supported Google's "open access" dictates for the D Block auction. This guy he opposes his own preferences.

    Gov't has to move very carefully with how it licenses spectrum because technology doesn't stand still. The Wi-Fi explosion is a victory of some sort for unlicensed spectrum, but we have all these co-existence and efficiency problems when 802.11b, 802.11g, and 802.11n devices share the same channel. Wi-Fi has to tolerate this, but a private spectrum manager could de-commission the obsolete devices to improve the efficiency of new devices.

    Details like this escape Wu's simplistic analysis.
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    So we should celebrate an "attack" on command-and-control regulation that says the broadband marketplace is a cartel and alludes to the need for some sort of public subsidization scheme as an alternative? You'll have to pardon me if I skip that celebration.

    And my blog post title may have been unfair if considered only in the light of that op-ed, but I was obviously assuming some knowledge of my /our work here at the TLF critiquing Wu's broader worldview and continued calls for comprehensive Net neutrality regulation. Still, I probably shouldn't have used that title without alluding to that broader body of work, which is so unambiguously anti-libertarian and "mother-may-I-ish" in character.

    But I'm still waiting to hear your defense of this new definition of cartels.
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    Adam, this certainly isn't the first time someone has described an industry with high barriers to entry as a cartel. I don't remember you objecting when I used the phrase to describe the ICC-era shipping industry. And Milton Friedman called the AMA a medical cartel. This might not be the precise economist's definition of the term. And Bob Levy has described the tobacco industry as a cartel. No price fixing there. And the Institute for Justice uses the word "cartel" almost every time it takes an economic liberty case, whether or not it involves explicit price-fixing. Calling the telecom industry a cartel is a bit of a stretch, but it's hardly absurd.
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    Tim... During its heyday, the ICC was actively fostering and protecting industry from competition, erecting unnatural barriers to entry, artificially setting prices for service, and working hand-in-glove with industry in other ways. That's why I didn't call you out on the use of the term cartel in that context--because it was fairly accurate. And the same was true of the CAB and airlines until the mid-70s. And one could even claim that this was the case in the telecom industry of old.

    But in Wu's piece this morning, he compares TODAY'S broadband marketplace to OPEC, which is a government-run cartel in the truest sense of the traditional definition. And you are defending that comparison in your TechDirt essay. I'm sorry, but that is just not accurate in my opinion.

    One should not so casually throw around terms like "cartel" to describe an industry that is growing more competitive despite the continuation of certain misguided regulatory policies. And the fact is, the more significant barriers to entry in the modern broadband market are increasingly economic in character (capital costs, technological considerations, etc), not regulatory (i.e. outright restrictions on entry, price controls, etc).

    So, I would agree with Joe's comment to your piece over at TD when he says: "It's too much of a stretch to say that broadband market=OPEC because one is an organization comprising of non-democratic governments, and the other one exists in a state where government regulation is less than ideal."

    Indeed.
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