May 2014

Lots of folks on the internet have been upset about a SCOTUS ruling against the FCC’s net neutrality regulations. I accidentally got on Lawrence Lessig’s rootstrikers mailing list when I tried to make a critical comment on a Citizen’s United blog post, so I’ve been getting lots of messages on that. I have always been unclear on why I should care one way or another, since the sweeping apocalyptic changes being predicted seem to have little basis in empirical evidence. After all, the regulations only date to late 2010, and it’s not like the internet was radically different before. ISPs violating neutrality seemed to be the exception, and generally reversed after a customer backlash. However, Timothy B. Lee has an interesting article on how the economics of the internet have been changing, making net neutrality rules (or something analogous to them for the new environment) relevant even if they weren’t before. Eli Dourado has a response here, claiming Lee is misunderstanding the nature of transit and the Comcast/Cogent/Netflix deal, but that might just further Lee’s point that we need to think in terms broader than “net neutrality” in the original Tim Wu sense (which may not even be strictly desirable for different use-cases).  To me the bigger question is why the European ISP market so much more competitive than ours. If we could achieve that, the consumers could have neutrality if they really wanted it.

On another note, the neutrality issue frequently gets framed as a threat to screw over small companies in favor of big established players. But the logic of price discriminating monopolies (which are actually more efficient than ones unable to discriminate) leads to those with a greater willingness to pay having to pay more. They are actually likely to subsidize those less willing to pay.

Just learned of his passing via Mankiw (via Eli Dourado’s twitter feed). He’s most closely associated with “economic imperialism”, which might be summed up as applying economics to subject matter normally investigated by sociology. Plenty of pop “economics of everyday life” has followed afterward, with his clearest acolyte being Steven “Freakonomics” Levitt. I cited (or re-cited, since Albert O. Hirschman’s citation is what alerted me) a classic Becker paper on the economics of irrational agents here.