Thursday, March 31, 2011

Net Neutrality: Self Interest is Power

In the Henry Blodget article we read this week, he puts forth the argument that the net neutrality crowd is just a bunch of self-serving zealots looking out for their own interest. My answer to that, which is the one he used in defending the companies who want to dismantle net neutrality, is, “So what?” Why is it the big corporations can try to advance an agenda consistent with their self-interest, but as consumers we can’t?

The moral foundation for self-interest in a free market goes all the way back to Adam Smith’s Wealth of Nations in 1776. He predicted that a self-interested free market led to specialization, which in turn led to greater choices for consumers, which in turn led to lower prices and more growth (really, really short version). I feel fortunate to have been able to watch this phenomenon in action over the last 20 years in the form of the explosive growth of the Internet. Here we had a market economy void of a lot of regulations, where people could advance their own self-interested agenda, specialize in a particular task, and by doing so, benefit all. Just think of all the operating systems, coding languages, and other advances in technology that have propelled us along during the last 20 years. The technological wonder that is the Internet is due to self-interest and limited government regulation.

Just as Adam Smith predicted the growth of a free market due to self-interest, he also predicted that the next logical step would be self-interested attempts by large companies to use their money and political influence to change the rules of the free market to benefit them. We see the beginning of this happening now as companies are lobbying the government to stay out of the way, don’t impede the free market, and let the chips fall where they may. This sounds noble, but when big corporations get the unrestricted power to dictate terms in a free market, it’s the consumer who suffers.

To combat the rising tide of corporate control in the Internet market, we must use our self-interest as consumers to balance out their power. Just as they may have the freedom to change prices or terms, we still have freedom of choice. A choice to do business with only those companies that embrace net neutrality. Hopefully, it won’t come to all that, and that the big companies will see the folly of their plans, but unfortunately there is a fine line between corporate self interest and greed, and that line seems kind of blurred together now.


  1. I've never read "Wealth of Nations", but now I'm interested in seeing exactly what Smith has to say.

    I completely agree that keeping an open market and free access to technologies like the internet are good for consumers. Just look at how recently cable companies are up in arms over streaming shows to devices like iPads- they're against any innovation that seems to benefit the consumer unless of course they're making an extra buck off of it.

  2. "lobbying the government to stay out of the way"

    I believe Mr. Smith would be right at their side, lobbying against regulation.

    I am a bit confused by your position on this. Towards that end it appears you believe companies should try to block or charge for access; the market will then punish ISPs that attempt this by rewards the ISPs that don't. However, at the end of the third you hint at government regulating the "big greedy" companies that try to make consumers suffer.

    Which is it? Follow Adam Smith and let the "free market" decide or push the government to intervene and "protect" consumers?

  3. I think the free market is going to play a big role in maintaining the current state of net neutrality. Big ISPs are going to lose too many customers if they try to change the status queue and throttle non-paying websites.