“Regulation” of the Internet: Lessons
from the Wall Street Meltdown?
By Aaron Weiss
You need only look at the cash now stuffed in
your mattress, and sock drawer, and walls, to
be reminded of the financial tsunami currently
washing over the U.S., and perhaps world,
economy. It is difficult to find two people in
the same room to provide the same explanation for what is going on. But it appears that
risky lending practices, inadequate safeguards,
and lightly or unregulated financial institutions
performing the roles that used to be reserved
for their regulated counterparts (real banks) all
play some part in Wall Street’s collapse.
Critics, especially on the left, repeatedly cite
lack of regulation as central to our current economic woes. Liberals—the right argues—love
regulation, and the industry-strangling consequences that come with it. Conservatives—the
left bellows—loathe regulation, and prefer to
let greed run unchecked. The conservative view
has won out in recent years, if not decades.
Perhaps it is simplistic to paint all forms of
government regulation over the private sector
with the same brush, but let’s do it anyway.
Regulation might best be described like antibiotics. It isn’t something you want to prescribe
to every patient who walks through the door.
Too many antibiotics can harm the individual
and public health at large. But tossing the medicine in the trash is no solution either. Viruses
will run rampant and people will die.
With major banks and investment firms
now falling like dominos, largely due to their
own unfettered practices, we are now seeing
that the medicine has been under-prescribed.
Hey now—maybe “regulation” isn’t such a
dirty word after all.
There has been much talk in recent years
about regulation and the Internet. Both sides of
the political aisle have taken predictable stances on the issue. Considering the harsh lessons
in banking, perhaps now is the time to consider questions of Internet regulation without
resorting to blind partisanship in either direction (permission to snicker is hereby granted).
The Non-Free Market
To opponents of Internet regulation, any kind
of government influence smacks of interference in the “free market.” Should government
require broadband providers to meet minimum
performance levels? Should government bar
broadband providers from discriminating
against different kinds of traffic? Should government require broadband providers to share
with competitors access to their infrastructure?
The resounding “NO” from regulation
opponents largely rests on the argument that
the market should settle these things, not the
state. Consumers, they say, will vote with their
dollars and reward ISPs who provide the best
product at the lowest price.
Indeed, competition is a wonderful thing. I
happily take for granted choosing among 200
breakfast cereals at the supermarket. Rental