Obama’s Latest Blessing for Us: Internet Regulation

(Ron Knecht) – In the mid-1970s, I began a life-long professional involvement in regulation.  A card-carrying liberal Democrat environmentalist in those days, I believed that all kinds of government regulation, if applied aggressively by the right people (progressive professionals like myself, of course), would hugely improve the world.

Some of my early regulatory work involved Chicago’s activist crowd that later fostered Barack Obama’s political career. Then, I went to California for a regulatory position in the first Jerry Brown administration, thinking my sweetest dreams were coming true.

Soon enough, I concluded that we needed divine protection from the regulator good guys, not the regulated bad guys.  When you’ve worked a career in regulation, you know well how politicians use their power for ends other than the broad public interest.  Many are great at conning folks into believing that their pet causes – especially environmental and regulatory ones – really are the public interest when they’re not.

As a regulatory professional, I became an advocate of reform and ultimately as much de-regulation as possible.  In those days, America was fortunate to enjoy a progress in this regard across a wide range of matters.

In the mid-1980s, it came to the communications business when federal Judge Harold Greene broke up the Bell telephone monopoly.  Ma Bell had reigned supreme since the Communications Act of 1934, stifling innovation and competition everywhere – even limiting the kinds of shoulder rests one could attach to a phone handset to free your hands while talking into it.

In the three decades since then, the world has experienced waves of communications revolutions that were unimaginable then and that have truly served the public interest by improving our lives.  The greatest progress has occurred in the freest areas of communications, especially in the essentially unregulated internet.

Those who knew life before the communications revolution recognize a breathtaking difference in the world.  Think about frantically looking for a phone booth on a cold night in a remote bad part of town after a flat tire, instead of dialing up help on your cell-phone from inside your warm car.  That small example only hints at the benefits.

Economists and policy analysts long ago began to understand that regulation, however, well-intended to serve the broad public interest, is almost always soon compromised and captured by regulated firms, their unionized workforces and related interests to serve their ends, not yours.  They may make accommodations with other special interests – witness the unnatural shaking up of energy utilities with the greenies – but if regulation were designed explicitly to maintain the status quo, instead of serving the public interest in innovation and change, it couldn’t be more effective at doing so.

In short, this great fundamental progressive project, business regulation, often operates as one of the most retrograde forces in our economy and politics.  Our liberation from it the last quarter of the 20^th Century – in transportation, communications, energy, finance and other areas – has fostered great leaps forward.

And our backslide into more of it in this century, culminating in President Obama’s decision to regulate the internet, is one of the most detrimental developments in our history.  Increasingly, this backslide contributes to reduced opportunity, innovation and change, slower economic growth, and thus a dimmer future for our children.  That is the ultimate consequence of progressivism — again, almost as if by design.

We may hope that human ingenuity will foster technological developments and business-model and institutional changes that will eventually allow us to bypass the most negative consequences.  But we can’t recover the growth and resulting increases in human well-being that will be lost in the meantime due to Obama and the progressives.

Ron Knecht is Nevada State Controller.