Telephone Fees

Arnold Kling

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The Milken Institute Review has an article by Robert W. Crandall, Robert W. Hahn, Robert E. Litan and Scott Wallsten, who note that

Jerry Hausman of MIT has estimated that taxes on interstate and international telephone revenues that are used to support low-income subscribers, high-cost carriers, schools, libraries and rural health facilities, are about three times more costly to the economy than the same sums would be if they were raised through general income or consumption taxes.

The article is about Internet telephony, which the authors say undermines the rationale for regulating local phone service, because it takes away the dominance of the Baby Bells.

Meanwhile, Kevin Werbach argues that voice over Internet Protocol is more than just telephony. For example,

Microsoft, with its XBox live online gaming service...has over one million paying customers for multi-player online games. And all of them have a headset that plugs into the game console, enabling real-time voice communications with other players.

This reminds me that the Cato Institute has a book with a wonderful title: The Half-Life of Policy Rationales: How New Technology Affects Old Policy Issues.

For Discussion. Why aren't we able to kill regulations when they become technologically obsolete?

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CATEGORIES: Regulation and Subsidies

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The author at M. Mortazavi's Weblog in a related article titled Does Technology Trump Regulation ? writes:

The short answer is "No," and the slightly longer answer is "No, not in the short term," where "short term" depends . A post on EconLog (edited by Arnold Kling) about " Telephone Fees ", ends with the following question: Why aren't we able [Tracked on September 1, 2004 4:01 PM]

COMMENTS (5 to date)

Latest Comment

Jervis Ninehammer writes:

Monopoly restrictions created by Congress in the 1930's are inhibiting our ability to create a modern communications system. Rent seekers have Congress in their pocket, forcing our country to accept inferior infrastructure.

Posted August 25, 2004 5:56 PM

Lawrance George Lux writes:

You kill the King when you throw away the Crown! Bureaucrats know how to enforce obsolete regulations, but know not how to interpret fancy new jargon. lgl

Posted August 26, 2004 10:36 AM

Linda Burke writes:

In this case, because state and local governments have not been able to find a replacement for the tax income they derive from communications taxes.

Posted August 29, 2004 7:27 PM

M. Mortazavi writes:

The arguments flowing from bureaucratic intertia have their own validity. However, . . .

Regulation defines the rules of the game. If you change the rules of the game more than is warranted, people will refuse playing. If people stop playing there won't be any game, and in commerce and economics, we know what it means if people refuse to play.

So, even when we have a more efficient and perfect bureaucracy (if one could ever exist), "validity" of regulation needs to be balanced against its "stability."

Posted September 1, 2004 3:41 PM

ken giddons writes:

Very interesting. Where can I find more information?

Posted November 23, 2004 3:33 PM

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