Blast from the Past

Harold Feld has a long screed accusing “the Libertarian/anti-dereg crowd” (which I assume includes us, although I kind of thought we were the pro-dereg crowd) of failing to be suitably awestruck by the awesome power of regulations to improve consumer welfare.

I think it’s quite fitting that he invokes “the New Deal-type ideal of using regulatory power,” because he clearly hasn’t learned anything since the New Deal. Not, for example, the lesson of the ICC, which corporate shill Ralph Nader attacked in 1970 for operating a cozy transportation cartel at the expense of consumers. Nor the lesson of the CAB which that notorious right-winger Jimmy Carter (and a Democratic Congress) abolished in 1978. Nor, I suppose, the way that the broadcasters’ cartel has used its power with the FCC to enrich itself at the expense of competitors and consumers.

Nope, it’s still 1933, and government regulations can only do good. That’s why we can not only skip having a debate about whether to regulation, we don’t even have to spend much time talking about how to regulate, because we can adopt “network neutrality and network attachment rules precisely because they have worked so well in the past.” Never mind that modern cell phones are radically more complex than the old-fashioned telephony networks to which Carterfone was applied. We’ll just put Feld in charge, and he’ll figure all those nitpicking details out for us.

To his credit, Wu does not stake out this extreme and rather silly position. Wu argues that “regulation, if necessary, should be a last resort.” He seems to recognize that new regulations do not always work out precisely the way their authors intended, and so it’s important to weigh costs and benefits and proceed with caution.

Fundamentally, Feld is guilty of what Will Wilkinson dubs the “fallacy of asymmetric idealization” (yes, Will, is a giant nerd). Feld attacks libertarians for blind faith in the efficacy of the market, while simultaneously demonstrating precisely the same kind of blind faith in the regulatory process. In the real world, both the market and the regulatory process have flaws. Our task as policy analysts is to compare the two and try to figure out which of them is likely to have more flaws in any given situation.

We libertarians are more apt to see flaws in the regulatory process, while those on the left are more apt to find flaws in the market. That’s part of healthy debate. But Feld is clearly not interested in a serious comparison of the strengths and weaknesses of different policy options. He’s already made up his mind that more regulation always increases consumer welfare, and the only question before us is whether we have the political will to use it.

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