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Net Neutrality: History Lesson

By 9 July 2010 2 Comments

Amity Shlaes is Senior Fellow in Economic History at the Council on Foreign Relations and author of the highly regarded The Forgotten Man: A New History of the Great Depression (2008).

Her recent column on AOL News taps her knowledge of the 1930s to recount “what happened in the 1930s to the Internet equivalent of that era, the utilities industry” when the government decided to get into the business via TVA.

It is an interesting and woeful tale, including the observation:  “The takeaway from the 1930s is that government spurs can be too sharp, and that government yardsticks quickly morph into birch switches. It’s all something to keep in mind whenever someone proposes government help.” It does not support any idea that detailed government intrusion into telecom is likely to be of net benefit.

US Gvt Map - From Wikipedia

[No more quotes – the objective here is to get the reader to link to the original so that AOL can collect clicks and sell ads and thus pay Ms Shlaes to write more.  Quoting enough to substitute for reading the original would not only violate legal principles of Fair Use, it would be contrary to the purposes of Digital Society. Go read it.]

A related point: one of the things that has baffled me about the telecom companies for several years is their a-historicism. U.S. history is rich in information about infrastructure, its financing, and its control, and very little of this supports the idea of intense government regulation. But as far as contemporary debate goes, this is a rich vein of ore that lies fallow.

[Correction 10:10 am: Spelling of “Shlaes” fixed]


  • dr2chase said:

    That article’s a tad unconvincing to me. The implication is that our experience with the TVA, predicts that government interference in health care will not end well.

    That’s interesting, but that’s only one comparison. I wonder, are there any other countries in the OECD where the government has interfered with health care, and how did it turn out for them? Are their costs higher or lower than ours, how is their life expectancy, how is their infant mortality? (Presumably, everyone knows by now that they all pay less and live longer — we’re number on only in spending.)

    Obviously, Amity Shlaes is using a different health metric, namely that of the companies delivering (or not) the healthcare. She may be narrowly correct that Obama said something silly, but one silly statement is not that important to me (is it that important to her? Really?) I am much more interested in driving down healthcare costs (incredibly important to long-term government budgets) and improving life expectancy. Reduced healthcare costs are also a stimulus to those companies not in the healthcare industry, which, though large, is not yet the whole US economy.

  • James DeLong (author) said:

    My interest was in the implications of the piece for telecom, which is the main focus of Dig Soc. Health care is a different game — but, as you might expect, my views are contrarian there, too.

    Obviously, we want health care delivered efficiently, but the goal of driving down over-all expenditures makes no sense. Maybe We Should Spend More on Healthcare (AMERICAN 2009) — after all, what better choices does one have?

    One can argue that greedy geezers should not be given a blank check on society for pointless treatments during the last few months of life, but this problem aside, I do not see a lot of waste that would not be cured by returning to an individual- as opposed to an employer-based system.

    I fear deeply the suppression of innovation as the government thrashes around, though — especially in pharma and devices. To a third party payer, life is easier if these expensive innovations are never made; that way, no one can demand them. See Saving the Goose: Intellectual Property & Follow-On Biologics (2008).