We're From the Government and We're Here to Help

I was surprised to learn from The Economist (subscribers) this morning that we have government regulators to thank for Wi-Fi:

Wi-Fi seems even more remarkable when you look at its provenance: it was, in effect, spawned by an American government agency from an area of radio spectrum widely referred to as ?the garbage bands?. Technology entrepreneurs generally prefer governments to stay out of their way: funding basic research, perhaps, and then buying finished products when they emerge on the market. But in the case of Wi-Fi, the government seems actively to have guided innovation. ?Wi-Fi is a creature of regulation, created more by lawyers than by engineers,? asserts Mitchell Lazarus, an expert in telecoms regulation at Fletcher, Heald & Hildreth, a law firm based in Arlington, Virginia. As a lawyer, Mr Lazarus might be expected to say that. But he was also educated as an electrical engineer?and besides, the facts seem to bear him out.

Huh (I think to myself), I guess it's nice to see something good come out of a government agency—that one might even beat Tang. But what, I wonder, was their big innovative move?

Wi-Fi would certainly not exist without a decision taken in 1985 by the Federal Communications Commission (FCC), America's telecoms regulator, to open several bands of wireless spectrum, allowing them to be used without the need for a government licence.

So they, uh, removed a barrier that they'd previously been the source of? How innovative. Though I shouldn't make fun; we could use plenty more "help" of that sort from regulators.

Comments

[Mick]

Using a real estate analogy, the present allocation of the radio frequency spectrum consists of occasional clusters of skyscrapers built on tiny plots of land surrounded by vast stretches of farm land. As with every other resource, misallocation of frequencies by government has created shortages. It would take a free market to create abundance.

[TWC]

Assuming that Tang (or silicone) wouldn't have surfaced in a free market anyway that is.

Clowns to the left of me,

Jokers to the right....

Good points all, Mr. Sanchez.

[thoreau]

I think the editors of The Economist were trying to praise regulators for having the good sense to not regulate in the case of WiFi. I realize that the editorial stance of The Economist could never pass any purity tests on this forum, but overall it seems to advocate moving in a direction that many on this forum would approve. If their stances were implemented by policy-makers it would be Libertopia by any stretch, but it would be a few steps closer than the status quo.

And, to quote a famous felon, "That is a GOOD THING!" 🙂

[thoreau]

correction:

it wouldn't be Libertopia by any stretch

[Julian Sanchez]

Actually, I think the "NASA invented Tang" thing is an urban myth, so presumably it did surface in a free market.

[KentInDC]

Silicone? What's that about?

[Warren]

Say Julian, aren?t you poaching on Jesse's turf?

[Jose Ortega y Gasset]

In an odd twist, the title of the abstract is exactly my ending line to Mr. Sanchez on a recent thread. Mr. Sanchez had commented on the "welfare queen" states. One element of my response was that alleged "welfare" received by those states often comes in the form of federal employees, buildings, land, reservations, projects, oversight and other so-called "benefits." Personally, I'd prefer a good carpet bombing most days... it's no less damaging and the inconvenience is over much more quickly.

Insofar as wi-fi, removing a government barrier can hardly be called "guiding," though it's much better than what government manages on most days. The real issue is that businesses are fundamentally anti-capitalistic... as pithily observed by Adam Smith. Creating a regulatory agency like the FCC only gives large corporations the opportunity to squelch competition by coopting the regulators. Witness the actions of the telecoms and cable television companies. As much as they bellyache about the FCC, they are the first in line to use the agency to limit competition. Just wait, however, the push to regulate wi-fi will come not from the FCC directly, but from some element of the private sector who wants a larger slice of the pie (or to protect oligopolistic profits.

[KentInDC]

Jose Ortega y Gasset,
I agree with you concerning the federal largesse. I grew up in the district of one of the old pork kings, Congressman Tom Bevill. Many people liked him because he brought so many useless federal projects to the area. Few of those people obtained any benefit from the projects that I could discern. Many of the projects involved construction and, in large construction projects, most workers come from other areas. I guess if one ran a bar or a cheap motel, they might benefit from the projects, but otherwise ... .

[Julian Sanchez]

Warren-
Yeah, but he's off right now, so I'm pretending to be our broadcast reg guy for the time being.

[thoreau]

Jose-

Google the following term (with quotation marks):

"curious paradox of the red states and blue states: federal spending"

3 links should come up, the first one being what you want, the second being another time that I referenced it on Hit and Run. The author actually did a study on Bush's margin of victory or defeat in a state and whether it's correlated with the per capita federal spending in that state minus per capita taxes paid. He found that (with all due statistical caveats and fine print) there was a positive correlation between Bush's margin of victory (or defeat, being a negative margin) and the net influx of federal money to a state (or net outward flow, for states that get less than they pay in).

Interestingly, he even looked at non-defense spending. The relationship became even stronger if you leave out military spending. Which makes sense: The high tech sector is concentrated (for the most part, with all exceptions duly noted) in urban areas, and the vast majority of the Navy's spending is (for obvious reasons) along the coasts (although the other services obviously have more inland facilities). So

I've mentioned this study on H&R before and so I won't go through all of the inevitable objections and caveats again. I'll just mention a few:

No, he didn't look at counties. That data wasn't as readily available. Yes, he made a point of considering other variables and testing alternate hypotheses. Yes, he's at Ohio State, but before that he was a the Hoover Institute (not exactly a bastion of left-wing sentiment). No, he didn't break it down by individual tax brackets, and he discusses that limitation in the paper.

Anyway, you might want to read the paper. It's interesting.

[Jose Ortega y Gasset]

My initial foray into this subject was a simple request for citations (which you and Mr. Sanchez have provided.) Having read the study, I feel compelled to ask, "What's the point?"

I am the first to agree that politicians of every stripe have a taste for pork. There are few communities, "red" or "blue" willing to toss out elected officials for bringing home too much bacon. I also find federal revenues versus expenditures a simplistic analysis. The actual economic effects of federal spending are much more complex. Take a simple example, an agriculture subsidy is given to the farmers in a red state in the amount of "x." The price of commodity "y" is artificially lowered benefiting the consumers in blue state in the amount of "z." The analysis you cite measures the sum of "x" and keeps "z" as zero. As noted, I also disagree that federal spending is a de facto benefit. From where I sit, it often does more harm than good.

In all honesty, Thoreau, I think the issue is that some persons in the "blue" states are offended by the rhetoric and are looking for a sharp stick to jab at the homespun, residents of Walton's Mountain, aka "red" America. In the end, this is just another version of "City mouse, Country mouse," with footnotes.

[Oh, sorry, off topic]

The Waltons voted for FDR.

[Jon H]

Julian,

If the FCC hadn't blocked people from using that part of the spectrum, WiFi may not have happened because the spectrum involved might have ended up full of interference from bandwidth-wasting primitive analog devices.

In that case, WiFi would have required a different swath of government-protected virgin spectrum.

[thoreau]

Jose-

We both agree that politicians across the spectrum like pork. So it wouldn't be shocking if the stereotypes were merely wrong and there were just as many pork recipients among the red states as there are among the blue states.

Instead, however, it turns out that the stereotypes are not merely wrong, they're 180 degrees opposite the truth: most of the states getting a net influx of federal dollars are red states, and the degree to which they benefit is positively correlated with Bush's margin of victory.

Why does this matter, aside from the surprise factor?
1) Well, to be frank, the culture war is really annoying, and this dispels a cherished culture war myth of liberal areas being the welfare queens. To the extent that the study debunks a favorite lie in American political discourse, it clears the air so that other, more creative lies can find their way into political stereotypes 🙂
2) To the extent that one wants to play in the dirty game of politics, it serves as a valuable nugget to toss at liberals: "Hey, guys, your constituents are the ones getting screwed by an over-sized federal government!"

[Kevin Carson]

Anybody see the irony in this:

"Technology entrepreneurs generally prefer governments to stay out of their way: funding basic research, perhaps, and then buying finished products when they emerge on the market."

[Jose Ortega y Gasset]

With all due respect, Thoreau, I suggest you make too much out of too little. You also have Mr. Sanchez flair for overstating things. A more interesting picture would involve county data. I have used the state of Maryland as an example. There is a profound difference between the City of Baltimore and the rural counties of the Eastern Shore. Be that as it may, the real issue is not that the "heartland" claims self sufficiency while the urban areas drain the national coffers. The welfare queen argument is a straw man and (to borrow a phrase from the "Fab 5" of television fame)... so 90s.

Rural areas do not grumble about urban pork as much as resent federal interference like environmental laws, unfunded mandates, preemption of state rights in areas like gun control. Other complaints (valid or not) focus on values. Go to a small town diner and talk about gay marriage for a different perspective.

I tend to think the cultural divide is somewhat overblown. On the other hand, the legitimate cultural differences (however slight and nuanced) deserve something a little more intellectually substantive than the welfare queen gambit.

[kevrob]

"Red" states and counties can sometimes team up with their "Blue" brethren to keep the pork coming. Bob Dole and George McGovern, an R and a D from flyover farmland, found support for the food stamp program from urban legislators. Creating demand for crops, herds and flocks was as important a goal of the program as helping the urban and rural poor.

It has been mentioned that, while, by some analysis, rural areas are subsidized by the Feds more than suburban or even urban areas, the proportion of young people volunteering for the Armed Forces is much higher in the Crimson Counties. The Blue States may be contributing treasure, but the Red States are giving blood.

Kevin

[James Anderson Merritt]

Oh yeah, let's applaud the government for getting out of the way.

Seriously. Let's encourage them to do more of it.

Next, the FCC out of broadcasting! Hoo hah!

[Douglas Fletcher]

I believe NASA also invented 'bakkon & eggz' to go along with their 'Tang.'

I seem to remember trying to buy some Tang a few years back -- couldn't find any. I guess all that government help wasn't enough to succeed in the long run.

[Noise]

Tang was invented by General foods in 1957 which was an adaptation of Kool-Aid which was invented in 1927 by Edwin Perkins. NASA , which was created in 1958, only served Tang.