4 ms·

Aren't free-market capitalism and net neutrality inherently at odds with each other? My general understanding of HN culture is that it is generally capitalist a

Aren't free-market capitalism and net neutrality inherently at odds with each other? My general understanding of HN culture is that it is generally capitalist and generally pro net neutrality. Could someone who finds themselves in both of these general categories explain their position?

pdonis 8y ago
> Aren't free-market capitalism and net neutrality inherently at odds with each other? Strictly speaking, yes. But free-market capitalism is also inherently at odds with ISPs having monopolies based on geographical area, which is the case for most of the US. Net neutrality regulation is an attempt to address the obvious issues with that, given the fact that the ISP monopolies are not going to go away any time soon. In other words, in an ideal free market, yes, net neutrality regulation would not exist; but we don't have anything close to an ideal free market in Internet access.
orev 8y ago
ISPs are not operating in a pure market. They have been granted billions of dollars in subsidies over the years, and in many places are/were also granted monopolies because communities don’t want wires being run by multiple companies. After all the benefits they have been given, now they want to turn around and cry “free market” and that they should not be regulated.
- ngngngng 8y ago
  It's also not possible to operate in a completely unregulated free market when your industry relies on a finite amount of space in the ground to lay fiber or airwaves to transmit on. There's a very limited amount of competition that can operate when a city has to approve someone digging up the roads every time a new company pops up.
  - pdonis 8y ago
    > There's a very limited amount of competition that can operate when a city has to approve someone digging up the roads every time a new company pops up. The solution to this is for the actual physical infrastructure that requires digging up roads to be owned by the city (or other local entity), so it only has to be put into place once, when the city is built; and for competing ISPs to either lease, say, fiber bandwidth from the city, or get a permit to pull their own cabling through already existing underground tunnels. The problem is that every municipality that has tried this solution has been sued into oblivion by the ISPs, who want to prevent open competition by any means necessary.
odorousrex 8y ago
The basic gist is that net neutrality wouldn't be necessary if ISPs weren't defacto monopolies. Because there is such limited competition in the broadband ISP space (most people only have one choice!) the free market can't work to drive down prices.
white-flame 8y ago
"Free market" is about freedom to enter, participate in, and exit the market. So things like monopolies and artificial barriers to entry are anti-free market. Net neutrality is policing specific legal vs illegal behaviors, similarly to environmental protection laws. A "free market" doesn't really (at least not publicly) allow illegal services, because the action itself is illegal, both inside and outside the market offerings, so it is relatively orthogonal. Certainly the maximization of profit (which has little to do with free market operations, but more of lock-in) would be helped if they were freely allowed to pursue any illegal activity in the name of profit. But it is the realm of the government, not the market, to decide what should be illegal for everybody including market participants, to mitigate predatory actions and destructive externalities.
- kstrauser 8y ago
  I describe it as "free as in GPL, not as in BSD". My ideal free market has enough regulation to prevent it from being owned by an oligopoly, so that the market itself is a free ground for experimentation and new business. I'm not a fan of markets that are free for the first, biggest players to corrupt and destroy.
mtgx 8y ago
High ISP competition would be preferable. But that's not going to be possible anytime soon until all state monopolies are removed (by law). Until then, net neutrality is needed to keep the internet fair in a market full of local monopolies/national oligopolies hell-bent on squeezing as much money as possible from their customers - even with illegal tactics like adding hidden charges to their bills. But even if there was a highly competitive ISP market, some ground rules would still be needed to ensure that the large players don't mess with the small players somehow, just maybe not as strict.
- emodendroket 8y ago
  > But that's not going to be possible anytime soon until all state monopolies are removed (by law). With perfect competition you still have the problem that a large amount of capital investment is required (making it impractical to challenge established companies) and ISPs from a pure profit motive have little incentive to serve less densely populated areas. The theory behind granting the monopoly is that in exchange they have to serve everyone and submit to more vigorous regulation.
  - pdonis 8y ago
    > a large amount of capital investment is required (making it impractical to challenge established companies) Not if the capital investment is made, as it should be, by individual localities who want to own Internet infrastructure, or at least the capital intensive portion of it, that they then lease to ISPs. But ISPs sue localities who try this.
    - emodendroket 8y ago
      I mean, why not go a step further and just run it as a municipal service at that point? Don't really see the point to adding a middleman to skim money off the top when the taxpayers have done the hard part for them.
      - pdonis 8y ago
emodendroket 8y ago
There's no such thing as perfect, natural free-market capitalism; government creates the conditions in which something called a "free market" can exist. Additionally, Internet service providers enjoy a monopoly in most regions they operate in, making the typical nostrums about the Invisible Hand even less convincing than usual. There is a long (although slowly being forgotten) history of vigorous regulation of the market used in the US to maintain competition and avoid a situation where a handful of large trusts control the entire economy. Do we really want to go back to Standard Oil doing whatever they want because nobody can do anything about it? Because that's the way we're headed.
- pdonis 8y ago
  > government creates the conditions in which something called a "free market" can exist No, it doesn't. A free market is a market in which all transactions are voluntary. Such a market is much more likely to exist in the absence of government regulation. > Do we really want to go back to Standard Oil doing whatever they want because nobody can do anything about it? You mean the days when Standard Oil obtained a de facto monopoly by selling oil cheaper than any competitor, and thereby saving us, the customers, lots of money? At least until the government stepped in and messed things up? (For an even more egregious example, look up what happened to Alcoa Aluminum.)
tmh79 8y ago
There is no such thing as a "free market". What "capitalists" really want is "strong competition", not "free markets". The "free market" zealots think they are capitalists, but they really end up promoting a rentier economy where monopolists abuse state power to create perpetual advantages that benefit themselves but harm consumers in terms of higher costs, fewer options, etc. The problem with internet services is that the infrastructure required creates a natural monopoly (ex: running fiber optic cables to each persons house), and there is a lot of regulation in many markets that ISPs are granted de facto monopoly power by the state itself in exchange for a guarantee of universal access for everyone in a given area, even if those customers are unprofitable/too expensive to service. If there was no monopoly at the ISP level, natural or otherwise, then there would be no need for net neutrality, as consumers would be able to choose alternatives and ISPs would compete on value. Net neutrality is an anti-monopolist regulation.
- white-flame 8y ago
  Anti-monopolist is pro-free market. Monopolies are kind of the opposite of markets.
  - hirundo 8y ago
    A distinction should be made for companies that achieve monopoly market share by providing market leading value rather than by sabotaging competition.
devwastaken 8y ago
Capitalism is great when it's many companies competing. That's the kind of capitalism I support. Capitalism isn't so great when a highly in demand market is largely geographically controlled by very few, with that control also being largely governmentally involved because part of its product is now essential infrastructure. There are thresholds for when how markets operate starts to have effects that have sizeable socioeconomic effects. I don't think it's hyperbole to claim that the Internet is now an essential part of U.S. commerce with itself and the world. Whenever we talk about physical commerce, like stores or driving to work, we generally agree we need some form of government oversight and regulation so that the commerce can keep flowing. For example if a highway has a wreck it can prevent millions of dollars being earned all across the board. This is in part why we have road safety standards, and standards for the vehicles that can be on it. I think the internet is similiar in some ways. We now use it for work in lots of places. For government applications, and to buy and sell a significant amount of goods. Entertainment is included as services and goods. When we consider commerce flowing freely we have to also consider the real bottlenecks to it in relation to monopalistic control. Is netflix's bandwidth actually a significant stress for Comcasts networks? If it is, is it because netflix's bandwidth is inherently too large for what Comcast can realistically afford, or is it because Comcast does not want to innovate and/or improve their infrastructure? I was surprised when I found you can get a 1Gb/s dedicated line through Cogent or Hurricane Electric for about $150. This is transit network that has very low latency, and they're much smaller companies than U.S. ISP's. Residential internet is not dedicated, it's shared. I don't have the data on how much is actually used but I highly suspect only about 1/20th is used by most people overall, if not less. I think as it stands right now, it's ISP's lack of competition leading to lack of effort to provide a good product. Given their position and lack of effort they are the ones who are actually hurting free commerce. If they are hurting free commerce then what should be done about it? Well, as I originally stated, ISP's are in the business of infrastructure. You don't have realistic alternatives that do allow that commerce (In this case, bandwidth). So, do we just ignore commerce for the country being limited, or do we force the hand? I think forcing the hand is a bandaid, but a true solution, competition, is much further out of reach. Any time anti-monopalization is brought up you get the same notions of 'free market' saying no, when monopalization puts down free markets.
dragonwriter 8y ago
> Aren't free-market capitalism and net neutrality inherently at odds with each other? Yes, but laissez-faire capitalism has been largely abandoned in favor of mixed market economies in the developed world for the better part of a century. > My general understanding of HN culture is that it is generally capitalist HN does not have a strong consensus on my economics. There is definitely a return-to-the-gilded-age faction, sure, but they aren't alone.
c3534l 8y ago
I'm all in favor of healthy, competitive free markets with reasonable assurances to protect consumers and control for externalities. Basically your boilerplate I-took-some-econ-courses-in-college mentality. The problem is only in very large cities is there any internet competition, information asymmetry and deceptive advertising practices harm consumers, and having free and open access to information is in societies best interests. Capitalism requires that everyone play by the same rules, that those rules be fair, and that there be competition and alternatives. Without net neutrality, a single corporation can dictate to an unprecedented degree what information you have access to for any purpose whatsoever with no recourse. This isn't because they're in the business of generating information, but because they put themselves between the producer and the consumer. It's not any different from the anti-competitive practices of the robber-baron era where Standard Oil owned the rail roads, then priced out competition from transporting their oil to gain a monopoly. We know from the past behavior and the current behavior of ISPs in other countries that the reason they want to end net neutrality is so that they can price out and block YouTube to gain a monopoly on video services, or to do the same to any other area they want, simultaneously making more money and the world worse off because of it. I love businesses. But when Standard Oil charges certain companies one rate for train fare and themselves a different one, or when Bell charges you extra fees to connect to non-Bell telephones (or blocks them entirely), then you have a market failure and the government needs to step in and break up those companies and force them to be competitive. Without competitive markets, you don't have capitalism, you have feudalism.

pdonis 8y ago

> Aren't free-market capitalism and net neutrality inherently at odds with each other? Strictly speaking, yes. But free-market capitalism is also inherently at odds with ISPs having monopolies based on geographical area, which is the case for most of the US. Net neutrality regulation is an attempt to address the obvious issues with that, given the fact that the ISP monopolies are not going to go away any time soon. In other words, in an ideal free market, yes, net neutrality regulation would not exist; but we don't have anything close to an ideal free market in Internet access.

orev 8y ago

ISPs are not operating in a pure market. They have been granted billions of dollars in subsidies over the years, and in many places are/were also granted monopolies because communities don’t want wires being run by multiple companies. After all the benefits they have been given, now they want to turn around and cry “free market” and that they should not be regulated.

ngngngng 8y ago
It's also not possible to operate in a completely unregulated free market when your industry relies on a finite amount of space in the ground to lay fiber or airwaves to transmit on. There's a very limited amount of competition that can operate when a city has to approve someone digging up the roads every time a new company pops up.
- pdonis 8y ago
  > There's a very limited amount of competition that can operate when a city has to approve someone digging up the roads every time a new company pops up. The solution to this is for the actual physical infrastructure that requires digging up roads to be owned by the city (or other local entity), so it only has to be put into place once, when the city is built; and for competing ISPs to either lease, say, fiber bandwidth from the city, or get a permit to pull their own cabling through already existing underground tunnels. The problem is that every municipality that has tried this solution has been sued into oblivion by the ISPs, who want to prevent open competition by any means necessary.

odorousrex 8y ago

The basic gist is that net neutrality wouldn't be necessary if ISPs weren't defacto monopolies. Because there is such limited competition in the broadband ISP space (most people only have one choice!) the free market can't work to drive down prices.

white-flame 8y ago

"Free market" is about freedom to enter, participate in, and exit the market. So things like monopolies and artificial barriers to entry are anti-free market. Net neutrality is policing specific legal vs illegal behaviors, similarly to environmental protection laws. A "free market" doesn't really (at least not publicly) allow illegal services, because the action itself is illegal, both inside and outside the market offerings, so it is relatively orthogonal. Certainly the maximization of profit (which has little to do with free market operations, but more of lock-in) would be helped if they were freely allowed to pursue any illegal activity in the name of profit. But it is the realm of the government, not the market, to decide what should be illegal for everybody including market participants, to mitigate predatory actions and destructive externalities.

kstrauser 8y ago
I describe it as "free as in GPL, not as in BSD". My ideal free market has enough regulation to prevent it from being owned by an oligopoly, so that the market itself is a free ground for experimentation and new business. I'm not a fan of markets that are free for the first, biggest players to corrupt and destroy.

mtgx 8y ago

High ISP competition would be preferable. But that's not going to be possible anytime soon until all state monopolies are removed (by law). Until then, net neutrality is needed to keep the internet fair in a market full of local monopolies/national oligopolies hell-bent on squeezing as much money as possible from their customers - even with illegal tactics like adding hidden charges to their bills. But even if there was a highly competitive ISP market, some ground rules would still be needed to ensure that the large players don't mess with the small players somehow, just maybe not as strict.

emodendroket 8y ago
> But that's not going to be possible anytime soon until all state monopolies are removed (by law). With perfect competition you still have the problem that a large amount of capital investment is required (making it impractical to challenge established companies) and ISPs from a pure profit motive have little incentive to serve less densely populated areas. The theory behind granting the monopoly is that in exchange they have to serve everyone and submit to more vigorous regulation.
- pdonis 8y ago
  > a large amount of capital investment is required (making it impractical to challenge established companies) Not if the capital investment is made, as it should be, by individual localities who want to own Internet infrastructure, or at least the capital intensive portion of it, that they then lease to ISPs. But ISPs sue localities who try this.
  - emodendroket 8y ago
    I mean, why not go a step further and just run it as a municipal service at that point? Don't really see the point to adding a middleman to skim money off the top when the taxpayers have done the hard part for them.
    - pdonis 8y ago

emodendroket 8y ago

There's no such thing as perfect, natural free-market capitalism; government creates the conditions in which something called a "free market" can exist. Additionally, Internet service providers enjoy a monopoly in most regions they operate in, making the typical nostrums about the Invisible Hand even less convincing than usual. There is a long (although slowly being forgotten) history of vigorous regulation of the market used in the US to maintain competition and avoid a situation where a handful of large trusts control the entire economy. Do we really want to go back to Standard Oil doing whatever they want because nobody can do anything about it? Because that's the way we're headed.

pdonis 8y ago
> government creates the conditions in which something called a "free market" can exist No, it doesn't. A free market is a market in which all transactions are voluntary. Such a market is much more likely to exist in the absence of government regulation. > Do we really want to go back to Standard Oil doing whatever they want because nobody can do anything about it? You mean the days when Standard Oil obtained a de facto monopoly by selling oil cheaper than any competitor, and thereby saving us, the customers, lots of money? At least until the government stepped in and messed things up? (For an even more egregious example, look up what happened to Alcoa Aluminum.)

tmh79 8y ago

There is no such thing as a "free market". What "capitalists" really want is "strong competition", not "free markets". The "free market" zealots think they are capitalists, but they really end up promoting a rentier economy where monopolists abuse state power to create perpetual advantages that benefit themselves but harm consumers in terms of higher costs, fewer options, etc. The problem with internet services is that the infrastructure required creates a natural monopoly (ex: running fiber optic cables to each persons house), and there is a lot of regulation in many markets that ISPs are granted de facto monopoly power by the state itself in exchange for a guarantee of universal access for everyone in a given area, even if those customers are unprofitable/too expensive to service. If there was no monopoly at the ISP level, natural or otherwise, then there would be no need for net neutrality, as consumers would be able to choose alternatives and ISPs would compete on value. Net neutrality is an anti-monopolist regulation.

white-flame 8y ago
Anti-monopolist is pro-free market. Monopolies are kind of the opposite of markets.
- hirundo 8y ago
  A distinction should be made for companies that achieve monopoly market share by providing market leading value rather than by sabotaging competition.

devwastaken 8y ago

Capitalism is great when it's many companies competing. That's the kind of capitalism I support. Capitalism isn't so great when a highly in demand market is largely geographically controlled by very few, with that control also being largely governmentally involved because part of its product is now essential infrastructure. There are thresholds for when how markets operate starts to have effects that have sizeable socioeconomic effects. I don't think it's hyperbole to claim that the Internet is now an essential part of U.S. commerce with itself and the world. Whenever we talk about physical commerce, like stores or driving to work, we generally agree we need some form of government oversight and regulation so that the commerce can keep flowing. For example if a highway has a wreck it can prevent millions of dollars being earned all across the board. This is in part why we have road safety standards, and standards for the vehicles that can be on it. I think the internet is similiar in some ways. We now use it for work in lots of places. For government applications, and to buy and sell a significant amount of goods. Entertainment is included as services and goods. When we consider commerce flowing freely we have to also consider the real bottlenecks to it in relation to monopalistic control. Is netflix's bandwidth actually a significant stress for Comcasts networks? If it is, is it because netflix's bandwidth is inherently too large for what Comcast can realistically afford, or is it because Comcast does not want to innovate and/or improve their infrastructure? I was surprised when I found you can get a 1Gb/s dedicated line through Cogent or Hurricane Electric for about $150. This is transit network that has very low latency, and they're much smaller companies than U.S. ISP's. Residential internet is not dedicated, it's shared. I don't have the data on how much is actually used but I highly suspect only about 1/20th is used by most people overall, if not less. I think as it stands right now, it's ISP's lack of competition leading to lack of effort to provide a good product. Given their position and lack of effort they are the ones who are actually hurting free commerce. If they are hurting free commerce then what should be done about it? Well, as I originally stated, ISP's are in the business of infrastructure. You don't have realistic alternatives that do allow that commerce (In this case, bandwidth). So, do we just ignore commerce for the country being limited, or do we force the hand? I think forcing the hand is a bandaid, but a true solution, competition, is much further out of reach. Any time anti-monopalization is brought up you get the same notions of 'free market' saying no, when monopalization puts down free markets.

dragonwriter 8y ago

> Aren't free-market capitalism and net neutrality inherently at odds with each other? Yes, but laissez-faire capitalism has been largely abandoned in favor of mixed market economies in the developed world for the better part of a century. > My general understanding of HN culture is that it is generally capitalist HN does not have a strong consensus on my economics. There is definitely a return-to-the-gilded-age faction, sure, but they aren't alone.

c3534l 8y ago

I'm all in favor of healthy, competitive free markets with reasonable assurances to protect consumers and control for externalities. Basically your boilerplate I-took-some-econ-courses-in-college mentality. The problem is only in very large cities is there any internet competition, information asymmetry and deceptive advertising practices harm consumers, and having free and open access to information is in societies best interests. Capitalism requires that everyone play by the same rules, that those rules be fair, and that there be competition and alternatives. Without net neutrality, a single corporation can dictate to an unprecedented degree what information you have access to for any purpose whatsoever with no recourse. This isn't because they're in the business of generating information, but because they put themselves between the producer and the consumer. It's not any different from the anti-competitive practices of the robber-baron era where Standard Oil owned the rail roads, then priced out competition from transporting their oil to gain a monopoly. We know from the past behavior and the current behavior of ISPs in other countries that the reason they want to end net neutrality is so that they can price out and block YouTube to gain a monopoly on video services, or to do the same to any other area they want, simultaneously making more money and the world worse off because of it. I love businesses. But when Standard Oil charges certain companies one rate for train fare and themselves a different one, or when Bell charges you extra fees to connect to non-Bell telephones (or blocks them entirely), then you have a market failure and the government needs to step in and break up those companies and force them to be competitive. Without competitive markets, you don't have capitalism, you have feudalism.