Larry Lessig's Newsweek piece is a pre-dot-bomb retread

by Mike Weisman, Ask Uncle Mike

Larry Lessig’s latest article in Newsweek is very disappointing, a pre-dot-bomb retread that backs down from all his recent progressive thinking. It’s so dated, one wonders if it was written in the last ten years, or if someone just found this article now and decided to print it. When was this written? 1995? 1998? Are you sure this was written by Larry Lessig, not George Gilder? If this is what it purports to be, then it helps explain why Larry is a very good teacher, but he should never be let closer to a telecom network than the handset.

First of all, Verizon did not ‘build it after all…’ and neither did AT&T or Qwest, or anyone else. You built it, and so did I. All these networks were built out of regulated rate-of-return funds sourced from the local telephone networks, or from USF funds, or other similar sources. Sometimes they were a direct donation from the federal or state government. Bruce Kushnik’s and Om Malik’s books offer a good recitation of the recent history here, but a good deal of the infrastructure was built decades ago and is still in use. In fact, state and federal regulator can’t get the incumbents to give up use of these old, customer paid-for networks and infrastructure because it is so lucrative for the incumbents. The latest scheme: state and federal video franchising legislation lets incumbents, in many cases, build new high-speed fiber networks (think U-Verse, FIOS, etc.) and charge off the costs to the local telephone rate-of-return regulated monopoly.

Next, Larry incorrectly addresses the poor quality of regulation and the culture of corruption as the structure of regulation itself. This is Larry’s continuing intellectual sin. I thought he had left it behind in the last few years, but apparently it came back like a nasty rash, this time harder to cure. Strong scrubbing with disinfectant might help.

The structural problem with regulation in the United States is the people doing it! Other countries that have imitated our institutions, but peopled them with smart and honest regulators, have not sustained the same problems with agency capture, political gamesmanship, and know-nothing decisions. For example, does anyone ask why the members or chair of the SEC, FCC, FTC, or other agencies are chosen on a partisan political basis? WTF? I’m shocked, shocked, that politics is going on here! (”Capitan Reynaud, are you Democrat or Republican?”) And this same structural disease is repeated throughout our state and local institutions. Obama received 365 electoral votes: that does mean we get four FCC seats and they get one? When there are only 25 Republicans in the Senate, are we still going to require that they receive an equal share of appointments in the government?

The most disappointing part of Larry’s article, and the least supportable legally or economically, is pulling out the old tar baby of government regulation and giving it a few boots in the name of innovation. As Larry and many others have noted, the Internet, computers, transistors, most drugs, interstate highways, airports, and just about every other major innovation or modern infrastructure project is the child of regulation. Regulation, strong regulation from humorless experts, is what gave the world the GSM system, digital radio DRM/DB (except in the US: did you know your radio won’t work outside the US in a couple of years?), 100 MB Internet for $20/month, fuel efficient cars, safe airplanes, retro-viral drugs to help fight AIDs, Medicare and Medicaid, and so on.

Larry’s opinions carry a lot of weight. But, he has done incalculable damage with this piece in Newsweek. It will be hauled out again and again by the bitlords and modern Gilded Age Robber Barons to justify their rapacity and greed.

Finally, let me say that I whole-heartedly endorse the idea of getting rid of the FCC. However, the new agency would be much larger, better funded, with a much broader reach and depth. It would combine the FCC and the NTIA, and would also subsume our participation in the ITU and UN (currently spread around Commerce, State, and the Pentagon). It would include the parts of the USPTO regulating recording devices and digital media. It would include a large research arm ala the NIH to sponsor research and conduct research directly. It would have its own administrative law courts to regulate competition and intellectual property law within its ambit. In other words, it would be Ofcom. It would be a cabinet level office, and the agency would be professionalized ala Justice and Defense. Martin and Powell politicized the FCC, but that is not structural, its personal. The new agency would have a large enforcement arm with offices in the major states, aimed primarily at consumer protection (not incumbent protection), and it would issue far reaching regulations of national effect on all aspects of this sector.

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The media's job is to interest the public in the public interest. -John Dewey