Huckleburry said:
Someone from the heritage foundation made a very similar argument. You are correct, no good can be fully infinite. Yet there comes a time when measuring becomes an excercise in frustration. For example, Space. We are pretty sure that space is not infinite. But does it matter? Space is so big that measuring it is really not usefull because the human brain cannot process size on that scale. So physists are correct when they argue against the infinte void but there argument is useless because space is too big to fill. The internet is very similar. There is a limited amount of bandwidth, you are right there, but there is so much bandwidth that measuring it has become effectively useless. Bandwidth has become similar to space and like space is expanding daily.
Where is this infinite bandwidth? If it existed I would not be paying for Internet service. And if there were infinite bandwidth then no economic theory of any kind would apply to Internet analysis - economics is the study of how to allocate scarce resources. So we should move this thread to the general USA chat section.
Huckleburry said:
Regarding the Austrian view. I think it is pretty harmful to the model that it discredits monopoly power when there is empircal evidence supporting its existance. A model that makes no attempt to reconcile documented occurances in the economy seems pretty flawed. Am I to assume that monopoly power can not exist even though there is a large corpus of empirical evidence documenting its exitstance? It seems to me that you are choosing to bury your head in the sand rather than confront a major flaw in your model.
First it is not MY model. And you clearly do not understand Austrian economics even a little tiny bit. To simplify and use neo-classical terms you will understand:
They do not deny that a monopoly could exist. They simply believe the free-market is always functioning correctly. If a monopoly exists it will be temporary because market forces will win out in the end or the monopoly deserves to exist because the firm has a good product that no one else can make.
Further I could easily argue the government is the only reason monopolies exist in the first place:
1) The government enforces patent and copyright laws, making monopolies easy to start and maintain.
2) Monopolies like cable TV, utilities, etc, are strictly enforced by the government
Finally let me point out even from a neo-classical view, you cannot justify that because you can empirically find monopolies that it is cost effective (increases total surplus) to break them up. It may (and has been shown by neo-classical economists to) cost more to enforce antitrust laws than the laws create in welfare benefit.
Also, you are currently under the assumption that Friedman is correct - that economics is like physics. That we have universals that can used to measure all other economic phenomena against in a relative sense. And that a model is to be judged purely on its predictive power, not on the realisticness of its assumptions. It seems clear that both of these ideas may be partially or are entirely wrong. It is possible that economics like mathematics is purely theoretical and an a-priori science. We will not resolve this debate here.
Huckleburry said:
Next, why does public use of the internet automatically mean big brother intervention. Have you ever walked on the sidewalk? Because a side walk is a public good. Did sidewalk usage automatically entail a total loss of all rights? Did big brother come and takle you and make you the walking automoton that you seem to fear so much? From the sounds of things it did not which leads me to wonder about the other flaws in your model.
Yes actually. If I do not pay my property taxes, the government will take my property. I bought, I own it (I thought) but in order for me not have it stolen by the government I must allow government inspectors to inspect my property, and I must fill out detailed forms revealing all of my income collecting activities or they will seize all that I own. As a matter of fact, the Internet allows me to "leave" US borders to participate in activities not allowed here - like online gambling. That would end when the government takes over the Internet.
Huckleburry said:
And what about exclusivity? Yes people without wireless capable computers would not be able to use it. But does that mean they would not benefit from a nomadic network. What if there power bill goes down because the electric company becomes more efficient or the health insurance. Incorrectly you assumed that this would only affect consumers. In reality it would benefit suppliers as well.
I think you mean excludability. Your model has the government as the supplier. I do not care if they benefit. So the government controlled monopoly electricity providers will get higher profits? How does that benefit me again? So the government will be better able to gather data about the citizens and it will be cheaper for them to gather.
Yes, I am sure now that this is the worst idea ever.
Huckleburry said:
Finally this is not government usurption of a private good. Internet is far from ubixoutous and private firms have no interest in extending their networks beyond major urban centers.
Firms do not supply lots of goods where no one wants them. Have you ever been to Middle America? You cannot get lots things you can get in NYC there. Should the government supply those people with expensive chocolate and fine wine? NO!
Huckleburry said:
Finally, we live in a society where government views economic developement as one of its roles. If you would like argue the approriateness of this role be my guest just do it else where. The fact of the matter is this...Things that are essential to commerce are gererally involved in the government. This is true of the legal system as it is true of the majority of our infa structure. Connectivity has been empircally linked to economic development therefore connectivity ought to be a public concern.
No, I am arguing that the market does a better job of providing the goods and services to promote growth than the government can do. If it were a public concern, the certain members of the public would want to pay for it themselves by free choice, not ask me to pay for it by force.
Huckleburry said:
To recap...The austrian model is broken
bandwidth is not infinite but measuring it is pointless
and the government participates in the econonomy.
Huck
To recap:
The "Austrian model" is not really being discussed here, because you do not understand it. I was simply pointing out that the neo-classical paradigm is limited and if you only use those terms and ideas you will always get their results. Like in mathematics if you only function in real space you can really only do real analysis. Denying the existence of complex numbers does make them go away.
Bandwidth is not theoretically infinite nor is it practically infinite. Again think outside the box on this one. Engineers believed 128k computers were beyond the need of any person. They were wrong. If you gave me 1 gig upload and download speeds I would use them. So would lots of other people. You can only make the argument that it is infinite AFTER the technology is working and people are dramatically under-utilizing it. At which point I will tell you about how much money the government wasted installing the infinite network.
The government does participate in the economy - this is a fact, nothing more. It does not mean it is doing a good job or should expand its efforts. You should attempt to justify government intervention in any part of the economy by showing how the government has improved total surplus. If possible you could use the same model to test if the Internet will benefit in the same way.
Online class dismissed.
