Net Neutrality Update 2015 Week  13

The FCC has published the new rules they plan to implement. We have seen this routine before. We have history to tell us what is going to happen. It is not going to be pretty.

History and art mix in this case to predict the likely future if Net Neutrality stands. Even former supporters are lining up to fight it.

The history is the history of railroads and government regulation of them in America under laws VERY similar and in some cases the same laws and goals stated for Net Neutrality. The art is from a book written by Ayn Rand, Atlas Shrugged (published 1957). Many discount her book as the ravings of an ultra-conservative pro free market advocate. Few realize she spent years researching what she wrote about the railroads and laws of the day. Many are told she was pro-big-business. She was pro entrepreneur and free market.

When she completed her book that used railroads as a major element in the story she sent the manuscript to a ‘railroad expert’ of the day. She wanted an accuracy check. After reading the manuscript the expert asked her, “Do you realize all the laws and directives you invented are on our statute books already?” 

In 1887 the Interstate Commerce Commission was formed. The purpose as reported by Wikipedia, “The agency’s original purpose was to regulate railroads (and later trucking) to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including interstate bus lines and telephone companies. Congress expanded ICC authority to regulate other modes of commerce beginning in 1906.” Sounds like the pro Net Neutrality spin. the ICC was an aspect of government Ayn was writing about.

Robert Tracinski on Atlas Shrugged: “You do not need a reader’s guide to Atlas Shrugged—at least not for your first reading. Ayn Rand’s novel is clear, compelling, eminently readable, and perfectly comprehensible on its own terms. Yet Atlas is also a rich and complex novel, with an intricate plot in which dozens of moving parts mesh together and many minor themes are woven in amongst the novel’s big philosophical issues. It rewards further study, and my goal in this series is to share what I’ve learned about the novel over decades of reading it and thinking about it.”

Government control of the railroads was such a disaster it drove the railroads into bankruptcy by preventing them from competing with the then unregulated trucking industry. Now that they are both regulated shipping costs continue to increase and small innovating entrepreneurs cannot get started because of regulation compliance costs. Small private trucking companies are going out of business. Some of my relatives are leaving California because their trucking company has been regulated out of business by California. The ICC agency was abolished by Congress in 1995. When did you last hear of a government agency being abolished? Unfortunately regulating authority was passed to another agency.

In Atlas Shrugged the passenger rail was used as a story construct because it was a major industry and of significant importance to Americans. Everyone road trains. Airlines were new, dangerous, and expensive. Rail was too big or maybe just politically too important to fail. The result predicted by Rand for passenger rail was Amtrak, the nationalization of the industry – government takeover, industry stagnation and it happened.

When a hypothesis can be turned into a theory and a theory can predict future events, it is considered to be accurate and true. Something the ‘proven science’ of climate models cannot do. Ayn Rand did it. Her book from 1957 predicted the nationalization that happened in 1971 and the following results. She made more than one prediction and her philosophy is still having a high rate of success in predicting events and results.

Today Amtrak, a for profit government owned company, consistently loses money and is subsidized by the tax payer.

Amtrak sells a $9.50 hamburger that it costs them $16.15 to make. The tax payer pays $6.65 of the cost of an Amtrak hamburger. Such a deal. I can get TWO McDonald’s cheeseburgers for $3.30. Or a cheeseburger MEAL for $6.26. (2012 prices) It is also a violation of LAW for Amtrak to sell food at a loss. But, this headline ran in February 2015: New House Bill Unlikely to End Amtrak’s Habit of Losing Taxpayer Money Selling Food.

Why the difference in price between MickyD and Amtrak? The amount of government regulation and bureaucratic management. To fix the problem requires an act of Congress.

You may not have realized, since Obama could not get Congress to pass a Net Neutrality law, he went around Congress, essentially the voters, and had the FCC use the 1934 Communications Act. They arbitrarily declared and proclaimed the Internet falls under these rules… 1934 rules. Those rules have repeatedly been used to censor speech. You do know you cannot can’t say the ‘F” word on broadcast TV or radio?

If you are wondering how railroads, 1934 communications laws, and Atlas Shrugged all come together in the issue of Net Neutrality… well at least you are wondering.

It is in the history of America we see how the government regulated railroads to death and prevented competition and innovation in the industry. Atlas Shrugged comes into the picture because Ayn Rand’s philosophy accurately predicts government behavior in these matters and has a successful track record of predicting future outcomes of similar scenarios. She is right on way more than one count.

The scenario in Atlas that fits Net Neutrality thinking comes late in the book. Quoting from Robert Tracinski’s quote of Ayn in the Federalist: “Net neutrality bears some relationship to the Fair Share Law, under which Hank Rearden’s production of his new metal alloy has been restricted at the same time that every manufacturer has been told they have a right to an equal share of it. This means that the highest-value, highest-volume users, the ones for whom access to large quantities of high-performance metal is vital—such as Ken Danagger’s coal mines—are required to wait in line behind those who are making golf clubs and coffee pots.”

This is the scenario we saw repeatedly played out in Socialist Russia when they let crops rot at rail head loading platforms because the government thought the trains needed to be somewhere else to move something the politburo thought more important and employees weren’t allowed or didn’t care to anticipate the practical needs of moving food before it rotted. No practical priorities and no consequence for poor performance. In a private business the idiots would have gone bankrupt and someone with the brains to make it work would have taken over. But, it is really hard to fire the government.

I find it amazing that the arguments socialists and  radicals use most often against big business are the arguments portrayed against big business by Ayn in the first 100 pages of the book. Yet, they condemn her book saying she is pro-big-business…

In her day Ayn was writing about oil fracking… she predicted the government reaction we are just starting to see move into place. Presidential directives issued to agencies to use old authorities to restrict new industry. In the case of oil production, to stop it.

If you want to see the Atlas angle described in chillingly realistic comparisons to what is happening today, read: Net Neutrality: Yes, Mark Cuban, Atlas Is Shrugging. She wrote her stuff in the 1940’s and 50’s. The things she portrayed have been happening. There is a 3 part movie made from the book. It is online. From time to time you can find the parts on Netflix and similar services. Or you can buy the DVD/Blu-Ray.

Is it possible we will have a different outcome? Yes, it is possible. Anything is possible, It just isn’t reasonable or probable.

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