Arnold Kling  

Logistics and Telecom Deregulation

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Important Economic Drivers of ... Dissident Economics and Though...

Two more comments on the importance of private sector drivers of economic growth and inequality vs. policy drivers.

First, I forgot to mention logistics as a driver of growth. Fed Ex and Wal-Mart represent that.

Second, people keep talking about telecom deregulation. If by that you mean the 1996 Telecom Act, then I'm skeptical. That act was drafted before the Internet took off. My sense is that a lot of it was irrelevant before the ink was dry on the signatures, and that a lot of it utterly failed (CLEC's, anyone?).

On the other hand, you might mean the break-up of AT&T, which as I recall was driven by a judge. I'm inclined to concede that this one was a big deal. As of today, if you put AT&T back together, it would not matter so much. We have cell companies. We have cable.

Ultimately, I think that the technology, particularly the steadily increasing advantage of packet-switched networks over circuit-switched networks, did much more than regulatory policy to shape the current environment. But one might argue that without spectrum auctions and the AT&T breakup, the deployment of the technology would have languished.

On the way packet-switching crept on circuit-switching, there is a classic paper by Hal Varian and Jeffrey MacKie-Mason-- I believe it's this one.


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COMMENTS (3 to date)
Brent Buckner writes:

Judge Green issued the Modified Final Judgement in 1982.

It was within your three decades, but I'm not sure whether or not you'll count such an anti-trust action as deregulation.

Chuck writes:

I think it is interesting how you discount the fact that it was government action that planted the seed for the internet. I don't see the internet as we have it today as inevitable.

I grant that planting the seed is no more important than watering it and giving it sunlight - without the action of private enterprise, we'd not have the Internet today as we know it.

But still, without government, we'd not have landed on the moon, we'd not have the internet. We'd not have the Interstate highway system. We'd not have the Federal Reserve system controlling inflation. Just for examples. Auto CAFE standards created economic efficiency - we now get places on less gas than we would have otherwise, which is efficiency, which is economic growth.

Lex Spoon writes:

I see no reason we wouldn't have an Internet of some kind. Companies have been falling all over themselves trying to make their own major network, but they never manage to lock their users in completely. Examples would be AOL, MSN, Yahoo, Compuserve, and Prodigy. All of these had major networks of their own, but they all failed to keep users on their own net.

Much less clear is what sort of Internet we would have ended up with. In particular, I wonder if we'd end up with such a neutral network as we have, where anyone can set up an Internet service that is accessible to most of the world. I suspect the answer is yes we would have. The above mentioned companies all had important walled gardens at some point in their history, but so long as there are at least two major networks, there is very strong motivation for users on one net to communicate with users on another net.

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