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Progressives' hi-tech suckering

Laura Hollis

By Laura Hollis

Published Feb. 13, 2015

 Progressives' hi-tech suckering

Last week, FCC chairman Tom Wheeler announced the Commission's proposed rules on "net neutrality." The FCC is asserting its jurisdiction by analogizing the Internet to telephone communications, which originally operated on fixed infrastructure that one company owned. It's absurd to compare the Internet to 100-year-old technology, even as companies are discovering new ways to deliver content, such as wirelessly.

FCC Commissioner Ajit Pai has read the 332-page document, and warns that it sets the stage for government control of the Internet, including taxes and price controls. Those who oppose him point that huge corporate interests are controlling content flow now.

The concept of "net neutrality" isn't controversial. We're all sick of companies who choke content and stifle competition. But it's not about what we'd like the regulations to do. It's about what they will do. Treating the Internet such as a public utility won't increase competition. Public utilities have historically been government-protected monopolies. The greatest bursts of innovation have taken place when highly regulated industries or de facto monopolies such as telecommunications, air travel and trucking, were broken up or deregulated.

This debate is following a template that Progressives have perfected over the years, to consumers' eventual chagrin. Here's how it goes:

1. Activists create a clamor about a problem, the actual solution to which is always more complex than what they're proposing, which is (inevitably) "more regulation."

2. When you point this out to them — as well as the likely (largely uncontemplated and unpleasant) consequences, their answer is, "But we have to do something." Apparently even if it's something poorly thought out.

3. The proposed regulations are always touted by Progressives and their media pitchmen as being tools with which to counter "big business" and therefore beneficial "for the little guy," but Progressives conveniently neglect to mention (and the public somehow forgets) that "the little guy" doesn't have lobbyists, while "big business" does. It's a long, laborious, expensive process to get those regulations written, which Just happen to get written in such a way as to benefit "big business" and other players who are invested in the old ways of doing things.

4. So the regulations end up propping up failing business models, and choking off the innovations consumers would prefer — because those are typically created by "the little guy" who's challenging the status quo.

5. After the new regs are in place, more of all business' energy goes into making the government happy than into creating new goods, services or ways of producing and delivering them.

6. And that, miraculously, makes lobbyists and politicians much more important than those "little-guy" innovators and entrepreneurs. Which, of course, is exactly the way lobbyists, politicians and BIG BUSINESS like it.

7. Oh — yes — and then the regulations don't work. Or they create further problems. Or both.

8. Those who warned against them in the first place say, "See? THIS is what we were talking about."

9. Whereupon, those who ignored the warnings in the first place say, "But we had to do something ."

The most ironic aspect of this goat rodeo is that it works against the very causes and populations Progressives claim to care about. They complain constantly about the influence of business on government. But 80 percent of the businesses in the U.S. are small businesses. Small business owners, entrepreneurs and innovators — those whose livelihoods depend upon pleasing the public, not lining the coffers of politicians — have almost zero influence on government.

Markets — especially markets assisted by modern social media — do a far better job of ensuring customer satisfaction than government ever has. If you doubt that statement, consider this scenario:

If a corporation implemented a policy that consumers found deeply offensive, how long would it take Congress to pass legislation to ban it? How long would it take the Justice Department to conclude an investigation of it? Months? Years?

By contrast, how long would it take for a viral social media awareness campaign to painfully affect that company's bottom line? Days.

Tech writers advise us that the debate over "net neutrality" regulations will not be resolved anytime soon. But the Progressive love of labyrinthine regulatory schemes seems to be never ending. And the public falls for it every time.

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Laura Hirschfeld Hollis is on the faculty at the University of Notre Dame, where she teaches courses in business law and entrepreneurship. She has received numerous awards for her teaching, research, community service and contributions to entrepreneurship education.

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