Tuesday, March 22, 2016

Brief Thought on Government Subsidies

I recently read some essays debating the best way to provide "universal" low cost internet. As it is a very government oriented group, most answers centered on government involvement, and even the goal -- "universal" access -- showed a government-oriented bias, as the free market never ensures universal anything. However, listening to the debate something struck me.

One argument offered (after a lot of nonsense about monopolization*) was that in rural areas, the market simply would not support access. Even if the free market were efficient and cost-effective in populous areas, in rural areas, users would need to rely on high cost satellite for fast internet service. Thus, the argument is made, it falls upon the government to subsidize such access to give rural people access to cheap, fast internet.

My response is a bit different. In rural areas it is also probably difficult to get good sushi, see a live opera, find a taxi or a decent museum. So, should the government subsidize all of those as well? Or should we accept that certain areas impose certain conditions, and living in rural areas means you will not have access to some services? So why is it the duty of government to ensure rural people have cheap internet? For that matter, why is it a goal of civil society -- to which our tax monies must be dedicated -- to ensure universal access to the internet?

I honestly think the best solution is to let the market prevail. Some areas may see higher prices, or less service -- at least until costs of setup fall due to technological changes -- but that is life. Why must we try to ensure that no choice anyone makes has any negative consequences, so you can live in the country with all the conveniences of urban life? Or so every nation has exactly the same amenities? I thought the left loved diversity? Why do they seek to homogenize everything? And do it at the expense of taxpayers?

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* The argument is the usual, that "big" (See "Fear of the 'Big'") providers will come in and undercut the "little guys", then jack up prices. I have explained why this does not work repeatedly, but for those who have not read them, see "The Little Guy Can't Compete", "Saving Us From Lower Prices", "The Basics", "Competition", "The Gadarene Swine Fallacy", "A Passing Thought on Cell Phones", "Denying Reality", "Two Sided Processes and Claims of "Unfair" Outcomes", "The Difference Between Public and Private, Or, The Real Monopolies and Cartels" , "The Problem of Antitrust", "Consumer Protection, Cartels and the Failure of Regulation" and "Imperfect Competition, Abstraction and Anti-Trust".


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