Whither Homo Economicus?

by Lindy Davies

You walk up to a food counter in a train station. You have five minutes to grab a bite before you have to board your morning train. A grumbling young woman, who exudes contempt for you and for every other customer in the line, charges you a premium price for a leathery, slapped-together breakfast sandwich which, nevertheless, takes another three minutes to get to you. She and her colleagues are distracted; each of them likely has a long list of personal problems — but all you know for sure is that she has made your breakfast transaction thoroughly unpleasant. You have encountered Homo Economicus.

eatit“Economic man” is a key template for economic analysis. It assumes that we respond to the problem of scarcity with profit-maximizing behavior— or in other words, we try to secure material gain in the hardest-nosed, most self-interested way. Many people are uncomfortable with this idea: is it a simplifying assumption — or is it simply nonsense? People bristle at the notion of self-interested maximization. What about fun? Family? Spiritual Life? Cat videos?

And, anyway, we are often observed choosing to do things that aren’t “economical.” Someone drives into a convenience store twelve days in a row and buys a soft drink. The buyer could make a single trip to a supermarket and buy a twelve-pack of same beverage for 40¢ less per bottle. Who knows what constitutes economic behavior? Perhaps the soda-drinker had a crush on the cashier. Perhaps he liked to thumb through the magazines on sale there. And, anyway, the soda has zero nutritional value, so it’s really hard to say what’s going on in any sort of practical terms, but, well — he keeps buying those sodas.

“Economic Man” in Economic History

This issue isn’t new; it was recognized by the classical economists. John Stuart Mill was the first to refer to “economic man.” He made it clear that he saw Homo Economicus not as the whole person, but only that part of the person which concerns the science of political economy,

…an arbitrary definition of man, as a being who inevitably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with the smallest quantity of labour and physical self-denial with which they can be obtained.

Henry George added the clarifying insight that the desires we seek to satisfy are entirely subjective. Contra Adam Smith, George pointed out that our desires aren’t necessarily selfish; they might be spiritual, or altruistic. Whatever our desires are, anyway, we try to satisfy them with the least “irksome toil” (and, what constitutes “irksome toil” is also subjective: one person’s hard labor might be another’s best fun).

When we undertake irksome toil, unwilling to do so without compensation, seeking to do as little of it as we can — our behavior falls under the definition of Homo Economicus. Obviously, we want to spend as little time as possible in that state. We want to get mere profit-maximization out of the way so that we can enjoy our free time.

Despite the tremendous progress of labor-saving technology, there is still work that people have to do. People are still called upon to pick up garbage, change diapers, unclog drainpipes, guard convicts, seize territory, do laundry, teach children, serve all-night customers, patrol streets… and, even, write books. Will there ever be enough labor-saving inventions to get the Homo Economicus out of human lives? In Sacred Cows and Other Edibles, Nikki Giovanni offered an interesting point of view on this question:

I like my profession. I hope the telephone operators, the hamburger turner at McDonald’s, the pressure checker at Kentucky Fried who see to it that those spices and herbs get really deep in the chicken are proud, too.

colonelAt first, I thought Nikki Giovanni (whose poetry I like very much) was being facetious. She had the talent, drive and good fortune to enjoy a career as a poet. That didn’t necessarily make her life easy, but I think she’d choose it over frying chicken for Colonel Sanders. Eventually, though, I realized that her point is unassailable: if the chicken fryer doesn’t care about her work, everyone suffers. True, she is underpaid; most workers are. But, jobs are scarce: more personable and diligent workers are eager to take her place. Giovanni is telling us that, despite the manifest injustice of our society, one can still choose to be a person. Remember that young woman at the breakfast counter? She was resigned to being Homo Economicus — and you’re not going back to that breakfast counter, if you can possibly avoid it.

You might point out that it is in a worker’s economic interest to be more pleasant, so she can hold onto her job. But, I suspect that she cares very little for this job; she considers herself to be a worker, (impersonally, insultingly) hired to do a (dull, underpaid) job; perhaps her situation is a notch above abject slavery, but it’s not far above it. She is, in a word, alienated.

Is Social Progress Linear?

“Alienation” is something that Marxist theory has a lot to say about; indeed, it is said to be the basic condition of workers under the capitalist more of production. Marx saw workers as suffering from a four-fold alienation: from the things they made, from the process of making them, from their own selfhood, and from other workers. This cubicle of alienation in which workers (inevitably) find themselves is a big part of the reason why Marxist theory sees revolution inevitable, and capitalism doomed.

Others, however — such as Henry George — see the possibility of fundamental reforms that would make a market economy work for everyone. If we all seek to reduce the amount of irksome toil we have to to perform, it follows that a progressive society would be able to reduce the net amount of time that its people spend behaving as Homo Economicus. This would imply a continuum of social progress. At the bottom is slavery: a slave, compelled to perform “irksome toil” to survive and avoid punishment, is pure Homo Economicus. At the top, we might find an artist: getting paid for for work that was done for the sheer joy of doing it.

Then there is the joyous, painful endeavor of raising children — where does that come in on the scale?

Let’s consider a few examples:

Autoworker Aaron works for $17/hr in a nonunion Toyota plant, and has to make a decision about whether to join a union. He decides against it, because $17/hr is better than any alternative that’s available to him, and he doesn’t want to jeopardize his job.

Autoworker Betty is a member of the Communist party working at the Totota plant, and works behind the scenes to organize coworkers. Her activism is frowned on by her supervisors, who stick her with unpleasant tasks and don’t recommend her for promotion.

Dad Charlie chooses to forgo his career and stay home with the kids. His wife makes good money, but has a stressful, long-hours, fast-track career. Charlie’s role as a home support person makes it all work.

Mom Diane chooses to forgo her career and stay home with the kids. They’ve moved to a low-rent area and her husband is working part-time. They don’t have much money, but they have plenty of time together as a family.

Mom Ellen and dad Frank both work full-time. The kids are in pre-school, and after-school activities. They need to do this to keep up with their mortgage and all the other payments, and try to put some money away for the kids’ college educations.

Dad Greg and mom Harriet would both be working full time, if they could both find jobs. As it is, they work as they can, often on conflicting schedules. They’ve had to get help from friends and family to get by, and finding responsible supervision for the kids is a constant challenge.

diyNeighbor Ian worked overtime to save up enough to hire a contractor to build an addition to his house. Neighbor Jim made sure to have a flexible work schedule (at a lower pay scale) and built his home addition himself.

Can you divide the Homo Economicus behavior from the “for my own good reasons” personal behavior? Which of those examples do you admire? Which do you feel pity for? The further we rise, economically, above abject servitude, the more ambiguous this question gets. It gets harder to separate the time we spend making a living from the time time we spend pursuing personal satisfaction — each blends into the other.

The question is by no means simple. A progressive society, as we’ve seen, is one that succeeds in reducing the net amount if time its people spend as Homo Economicus. But, if we cannot clearly separate out the portion of our labor time we spend that way, then how can we make that distinction? How can we tell (in the aggregate) whether we are gaining or losing?

On the other hand, “gaining,” in the sense of moving along the line on which society is advancing (or retreating) might not be the only option, or the best way to look at things. Marxist theory sees human society as moving along a time-line from feudalism, through capitalism, on the way to socialism and the Workers’ Paradise. Henry George’s conception of social development also sees society as moving along a line, either forward toward a progressive society that maximizes both association and equality, or regressing, failing the promise of civilization, declining into a new dark age. Marx, I suppose, would transform Homo Economicus into Homo Comunismus, a fit and happy team player. Henry George would reduce Homo Economicus to a vestige, no more onerous or stressful than brushing one’s teeth. (Some versions of Marxist utopia, as well, have technological development enabling workers to sample many jobs and switch them at will.) These outcomes are, at best, a long way off. In the meantime, is self-interested maximixation all we have to look forward to? (Or as Nikki Giovanni put it, “Spam, Used Cars, and More of the Same”?)

When was Homo Economicus Born?

It may be, however, that in terms of economic behavior, society does not move in a line. There may also be a recursive process at work. Another possible starting point for social/economic development is the traditional society. There are various kinds of traditional societies, of course, but compared to the paradigm we’d call modern, industrial or developed, there are things they have in common. I think it would be accurate to say that the behavior we’ve been calling Homo Economicus was rarely, if ever, exhibited in traditional societies. True, there were fights over land and resources, and there was even slavery. There was drudgery and hardship; winters were long; lifespans were short. Nevertheless, in no indigenous culture was it the norm for people to spend substantial portions of their time performing meaningless tasks in exchange for things. We take this behavior for granted; our ancestors didn’t.

likitIn an earlier stage of industrial development the “labor time” model made perfect sense. It didn’t matter that the work might be meaningless, because the efficiency of industrial production made it possible for everyone to be better off. As productivity continued to increase, workers could organize to collectively bargain for better wages. In the United States this process reached its peak in the industrial golden age of the 1950s and 60s. While not everyone was happy (African Americans, for example, were effectively excluded from the general prosperity), millions of US workers were quite happy to get paid $25 an hour, with pensions, health plans and paid vacations, for being Homo Economicus.

It seemed like such a good plan: you get a decent job, put in the hours, get raises, buy a house (a comfortably appreciating asset), raise kids, send them to college, and then get rewarded for your career of homo economizing by settling into a well-provisioned retirement. But then “our jobs” started getting sent overseas, real wages stagnated or fell, and things started getting confusing. Raising a family started to require two full-time salaries. In the prevailing myth, June Cleaver and her friends had happily done the cooking and the childcare as their part of the family bargain. Now, suddenly, they were too busy, and these “household” tasks increasingly became part of the economy. Should June have received Homo Economicus wages for handling all those poopy diapers?

Such a question would never have come up among the unassimilated Sioux, or Inuit, or Australian Aborigines, the Kalahari Bushmen, or the artists of Lascaux or Mesa Verde. Such societies had their problems, to be sure, but alienation, in the sense that Karl Marx described, was not one of them. The Georgist economist Fred Foldvary put it this way:

Human beings did not start out poor, hungry, needing development. Primal man had natural wealth from the bounty of nature. Only after humanity turned to agriculture and conquerors took the land did the brave hunter become a lowly peasant working for a wage pittance from dawn to dusk while the lord dined on wine and game hens under chandeliers. Only after the descent to serfdom does development beckon with the promise of increasing productivity.

It has long struck me that the economic analysis of Henry George, dealing as it does with the pervasive, unavoidable role of land in society, offers a key theoretical bridge between traditional and modern ways of seeing the economy. When indigenous people admonish European colonists that “The land does not belong to us; we belong to the land,” they are not being romantic. They are making an entirely reasonable and true statement that arises from a worldview in which there is no Homo Economicus. That statement only seems quaint from the point of view of industrial society, which is predicated on owning the land and controlling its resources.

digitBut: industrial society has reached a turning point. We can no longer afford to reckon “economic growth” without factoring in its effect on the natural world. And we live in a dysfunctional society in which, in James Baldwin’s words, “not even the most spectacular recipients of this prosperity are able to endure these benefits; they can neither understand them, nor do without them, nor can they go beyond them.” (Soccer moms cannot escape this dilemma in their SUVs.)

I think we need to return — without turning away from the benefits of science and technology, for there can be nothing evil in science and technology per se, only in the self-serving uses to which we put them — to a life in which we are part of where we live, in which we are nurtured and informed by our place and our community. By doing so, we may be able to develop a sustainable understanding of “economic growth.” And then we can finally put Homo Economicus to rest. Not because there will no longer be work to do — but because the challenges of devising a sustainable future will leave us no time for the “irksome toil” that industrial development so usefully, efficiently, imposed on us. What we have to do will be too important not to care about. We will have to keep it real.

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On National Sovereignty

by Lindy Davies

It’s become a convention, on the news, to refer to the Jihadist force that’s been gaining ground in Iraq and Syria as the “so-called” Islamic State. This seems to be a requirement. Sure, they call themselves a state — but they’re not! States are sovereign. They have governments, and ambassadors and such; they have seats in the UN General Assembly — like Syria, for example.

What is it, really, that constitutes a sovereign nation?

To begin with, it has to do with authority and control; we think of it as “where the buck stops.” It may be comforting to think of this as an absolute thing (i.e., Israel absolutely has it; the Palestinians absolutely don’t). But it is not all-or-nothing, of course; there are degrees. The “national sovereignty” of a place like “The Republic of South Vietnam” (or post-Dubya Iraq) is an evanescent thing, crafted on the fly to suit the interests of a larger power. Nevertheless, international diplomacy rests, however shakily, on the concept of national sovereignty. So far in human history, is nations that make and enforce laws. International law is an ad hoc matter. It is enacted by means of treaties, and only enforced at the national level, if nations choose to do so. (Has the International Criminal Court ever compelled the United States to do anything?)

Nations have various degrees of power, and various degrees, alas, of legitimacy. If the nation is not powerful enough, it may fall to conquest by external powers. But what if it is not legitimate enough? The (so-called!) Islamic State’s legitimacy is bestowed by Allah — the same Deity that confers legitimacy, via the Queen, to land tenure in Great Britain. (It has to be the same Deity: both faiths believe there is only one.) The classical Chinese concept of national legitimacy was called “The Mandate of Heaven.” It was thought possible for a ruling dynasty to lose this, become illegitimate, and become deposed. If a nation is not legitimate enough, therefore, it may succumb to internal revolutionary forces.

Eventually, Divine bestowal of sovereign power came to be vested in hereditary monarchs. In the minds of the Enlightenment philosophers, however, sovereignty came to rest in the incontestable, and infallible, will of the people. Thomas Jefferson, for example, wrote that governments are instituted to secure the people’s inalienable rights, and that their powers — if they are just — are derived from the consent of the governed.

This raises questions. Who are “the governed”? How is their consent ascertained? How, and where, and in what ways are they to be “governed” — presumably through the exercise of the sovereign powers of a “government” which the people have chosen? According to Jefferson, a governments just powers are derived from the consent of the governed — and it wields those powers through the process of creating and enforcing laws. Does this mean that if a majority of a nation’s citizens decide, through some representative process, that slavery is OK, then slavery is OK? Well, it’s legal, anyway; fee-simple private ownership of human beings was legal in the United States for 75 years.

verb
“Nation is a verb.”

Furthermore, the idea of government cannot be separated from the question of jurisdiction. Over what area does sovereign control extend? There is no global government. Our concept of sovereignty is inextricably bound up with the idea of nationhood. Now, sometimes we might speak of a “nation” in spiritual or cultural terms — a holy covenant? a community brought together by its victimhood? a romantic generational consciousness, such as the “Woodstock Nation”? But, in stark political terms, such notions are frivolous. In the “real world,” nationhood is a matter of jurisdiction over a defined portion of the planet: a territory — a piece of land.

Job #1 for any nation is the administration of its territory: its boundaries and their defense; the duties and prerogatives of states, municipalities and other lesser jurisdictions; and — most important — what people can do with that territory: what rights they have to its possession and use. This has obvious economic implications, because all economic activity must use land in some way. It is incumbent upon a sovereign nation to set rules concerning how people use the land: to make stuff, to live on, and to dump their garbage in.

Fine, OK — all of this sounds so commonplace as to hardly be worth mentioning. But, when we start to think about how these issues play out, we find some astounding breaches of logic.

Many smart people have told us that international trade agreements, such as the Trans-Pacific Partnership, or TPP, dangerously erode national sovereignty. Democratic societies have repeatedly chosen to implement regulations deemed necessary to protect health, safety and the environment. Pacts like the TPP seem to be taking these powers away from governments.  I wonder how many citizens in struggling, export-dependent poor countries have any inkling what prerogatives their “sovereign governments” have given away in order to stave off trade sanctions.

But it’s not just the poor countries that are “yielding up their sovereignty” to multinational corporations — oh, no! Lots of people in the Great and Powerful USA are exercised about the increasing ease with which corporations reconfigure their profits into other jurisdictions to avoid paying “their fair share” of US taxes. Have the governed given their consent to that? Perhaps not, but the Emperor, in any case, has made it legal.

If Job #1 of a nation is to administer its territory, what can we say of a country that allows private investors to hold hundreds of thousands of hectares of that territory entirely idle, while its people have no place to make a living? Hasn’t that nation’s sovereignty been seriously degraded?

Furthermore, if a corporation is making “obscene” levels of profit in the United States and then paperworking them into another country to avoid taxes, well — did it not need land, locations and natural resources, to undertake the activities that created those profits? Did it fully compensate the community for the privilege of using that land?

Questions like these have a way of making one’s head swim. They seem to sudden, too sweeping. One is tempted to back-track to see whether some key factor has been left out. That impulse is both understandable and necessary — because in today’s discussions of economic policy a key factor is left out.

So let’s back-track. We’ve said that the most vital task of a nation is the administration of its territory. It defends against invasion, creates and enforces laws, and provides all kinds of infrastructure, both civil and physical. To the extent that nations do these things effectively, they become pleasant and prosperous places to live and do business. And to the extent that they become pleasant and prosperous places, the land in them — most of which is held in fee simple by private interests — increases in value.

land

Any nation that allows fee-simple ownership of land has already — long since — yielded up its sovereignty to private interests. These recent “sovereign giveaways” are just minor embellishments. We can close the barn door if we like, but the horse is long gone.

One of the many things this means is that, while the TPP will exacerbate a number of problems, the solution to those problems is not to be found in protectionism. “Local self-sufficiency” will only make the local landlords a bit less rich.

There was a West African nation that took a series of effective steps to assert its own rightful sovereignty — have you heard of it? It began with a military coup — nothing very noteworthy in that; there are lots of military coups — but this one set out to implement a novel program of reform. The country defaulted on its foreign debt. It proceeded to abolish all income taxes, VATs and tariffs, and to collect the value of land for its public revenue. And what happened? It no longer needed exports, or foreign loans, because its domestic markets were strong, its employment full. The most serious policy problem it had to deal with was the large numbers of people who wanted to immigrate. This country’s name is Alodia — but, alas, it is fictional. So far.

 

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Counting the Zeros: Fighter Jets vs Trains

by Lindy Davies

I once introduced a paper at a conference with the laugh line, “Many of the papers you’ll hear this week make extensive use of mathematics, but mine is a bit different: it makes extensive use of arithmetic.” The economists in the audience knew what I was getting at: minutiae can be examined in fascinating (sometimes Nobel-winning) detail, but often the really important points are made by keeping track of the relevant orders of magnitude — in other words, by counting the zeros.

Here’s an example, to get us started. How many days, months, whatever, does it take for a million seconds to go by? I whipped out my calculator and discovered that a million seconds equals about 11.6 days. Surprised? Well, then, how about a billion seconds? That’s a thousand times longer: 31.7 years. The next one is easier, because we’re sticking with the same unit, but it boggles the mind nevertheless: a trillion seconds equals 31,709 years.

Let’s explore the wonders of zero-counting by comparing and contrasting a couple of lines in the budget of the United States.

Amtrak’s Northeast Corridor Passenger Rail ServiceThe F35 “Lightning” Joint Strike Fighter
— relatively inexpensive; mildly profitable— most expensive weapon in history
— deeply maligned, desperately underfunded— despite criticism, lavishly funded
— used by over 11 million passengers annually— appropriations shared by contractors in 46 states
— ridership increasing as highway congestion worsens— not yet cleared to fly in inclement weather

Dear reader, you can probably see where I’m going with this, but please bear with me: the numbers involved are noteworthy.

owow

The F35 is, in terms of its design parameters, one seriously groovy airplane. It is a “fifth-generation” fighter jet, intended to supersede a number of the fighter jets that are now in use. It is called “joint strike” because the basic plane would be used, with some modifications, by various branches of the military in different missions: fly from carriers for the Navy, take off and land vertically for the Marines, evade radar detection, and locate enemy fighters long before they’re able to locate it. Its pilot will wear a helmet designed to make the plane an extension of his brain; all manner of information will be displayed right before his eyes; next-level optics will allow the pilot to see through the plane as if it were transparent. This is majorly awesome, sci-fi stuff. Lockheed Martin puts it this way:

The supersonic, multi-role F-35 represents a quantum leap in air dominance capability with enhanced lethality and survivability in hostile, anti-access airspace environments…. Missions traditionally performed by specialized aircraft — air-to-air combat, air-to-ground strikes, electronic attack, intelligence, surveillance and reconnaissance — can now be executed by a squadron of F-35s.

However, alas, the F35 is also far behind schedule, and way over budget. “A single Air Force F-35A costs a whopping $148 million.” writes Winslow Wheeler, for the Project on Government Oversight. “One Marine Corps F-35B costs an unbelievable $251 million. A lone Navy F-35C costs a mind-boggling $337 million. Average the three models together, and a ‘generic’ F-35 costs $178 million.” That’s per plane — and, because the F35 is being tested as it is produced, and faulty systems must be retrofitted on planes that are already being flown, the per-plane cost is likely to increase.

The following cost figures for the F35 program were reported by CBS news: $400 billion will be spent to buy 2,400 aircraft — twice as much, in constant dollars, as the Apollo program. To date, the F35 program is $163 billion over budget. It will cost approximately $1.5 trillion over the life of the program. In 2014 we spent approximately $6 billion on the F35.

Maybe you didn’t hear me. I said: twice the cost of the Apollo Program.

Reasonable people can disagree about the urgency of the United States’s need for this airplane. The stated mission is to assert overwhelming superiority, in any aerial combat mission, over any plane the Russians or Chinese might plan to build in the foreseeable future. The US already has a fifth-generation fighter in service, the F22A Raptor — which itself costs some $150 million per unit and, according to the US Air Force, “cannot be matched by any known or projected fighter aircraft.” Only Russia has any plane that is even remotely comparable, and Russia is obviously throwing much less money at the problem than the US is.

Political Engineering

The thing about the F35, though, it that its development and manufacture is distributed with great skill through a multiplicity of key Congressional districts. “Lockheed takes every opportunity to remind politicians that the airplane is manufactured in 46 states and is responsible for more than 125,000 jobs and $16.8 billion in “economic impact” to the US economy….” wrote Adam Ciralsky in Vanity Fair. “Political engineering has foiled any meaningful opposition on Capitol Hill, in the White House, or in the defense establishment.”

To make a long story short: it is virtually certain that — whether we need it, or can afford it, or not — we’re going to have the F35 “Lightning” Joint Strike Fighter. That nickname, by the way, is ironic, because the F35 has not yet been cleared to fly within twenty miles of a thunderstorm.

f35

Fixing Our Trains

Amtrak, the US’s much-maligned passenger rail system, operates 21,300 miles of routes. But, for the purpose of our present comparison, we’ll concentrate on the 471-mile segment that actually turns a profit: the Northeast Corridor. This is the rail service between Washington, DC and Boston, on which Amtrak carried 11.4 million passengers last year. It is only on this route that Amtrak operates its Acela express trains, which can go over 150 mph — they can, at least, on the few sections of track that are in good enough repair. Amtrak owns and maintains these tracks, which are also used by commuter-rail systems in DC, Baltimore, Philadelphia, New York and Boston — and some of them have gotten quite rickety over the years.

To pick one of many examples, the Portal Bridge over the Hackensack River in New Jersey is 100 years old and carries 450 trains a day — if things stay on schedule. The old swinging drawbridge causes many delays. It would cost $900 million to replace it with fixed bridge. Republicans have harshly criticized Amtrak for many years — and they can’t all be wrong; it’s likely that there is some significant degree of inefficiency and inertia in Amtrak’s program. The House of Representatives recently voted to cut Amtrak funding for the coming year to the tune of one and two-thirds F35s ($260 million) — the very day after a deadly derailment outside of Philadelphia.

This seemed an exceptionally spiteful move, even for Congress. This particular accident was probably caused by human error. But it could have been prevented, had a “Positive Train Control” system been in place; a 2008 law requires it to be implemented by the end of this year. Such systems are routinely used across Europe. Amtrak, however, is strapped for funds. Its “Vision Statement for the Northeast Corridor” laments:

In the New York vicinity, some areas are operating at 100% capacity, resulting in significant delays from even minor operating disturbances. The [Northeast Corridor] consists of a mix of aging infrastructure, much of it built 80-150 years ago, that will require extensive repair for safe and efficient operations at current traffic levels.

Folks, that’s like commuting to work every day at 70 mph. in an old VW beetle that only goes that fast (and has a tendency to overheat). Nothing against the beetle, but — how long could you count on that?

 

late

Reasonable people can disagree about the efficacy of subsidized passenger rail service in the megalopolis between DC and Boston. I don’t think anyone disputes, however, that the highways in that region are getting more congested all the time, and that reliable, reasonably-priced intercity rail service wouldn’t be a bad thing. But, can we trust Amtrak to provide that? Not according to Rep. John Mica (R-FL), who said this on the day of the budget vote: “The problem is you give Amtrak the money and they blow the improvements or squander it. Congress does not trust Amtrak. They’ve given them the money before.” Mica’s largest campaign contributor is the air travel industry.

Let’s talk numbers

Amtrak’s overall operation was $329 million in the red for 2014, but its Northeast Corridor service made a profit of $286 million. You heard that right: that means that the 20,829 miles of non-NEC Amtrak routes are subsidized by over half a billion dollars a year! That’s fully ten percent of what we spend annually on the F35 “Lightning” Joint Strike Fighter! (And, it’s eight percent of what the British government spends annually on passenger rail.)

Amtrak’s “Vision for the Northeast Corridor,” offers various proposals for improving service and reliability, which are echoed in somewhat greater detail in a report by the by the Federal Railroad Administration. The proposals are graded, A through D, in escalating wish-lists. The ones in section A amount to simply maintaining existing capacity (which nevertheless calls for some rather expensive catching up). The suggestions in section D, though, are the stuff of Republican apoplexy; they propose to:

transform the role of rail, so that the rail system would accommodate a significantly higher percentage of travelers and passengers, enabling new travel patterns and new markets to be served… positioning rail as a dominant mode. This would be accomplished through a major increase in the capacity of the NEC along its entire length, service to new markets, and a dramatic reduction in trip times.

What the heck, you might as well ask for what you want. This dramatic vision (including such luxuries as replacing the Portal Bridge in Hackensack), this pie-in-the-sky wish list, way more than Congress would ever appropriate, this tremendous infrastructure enhancement that would make life so much more efficient and convenient in the Northeast (not to mention conferring significant environmental benefits) — this commie-liberal subsidized rail boondoggle — would be gradually implemented between now and 2040, at a projected cost of $151 billion. That would amount to about $6 billion per year. Does that figure sound familiar? It’s the amount that we spent in 2014 on the F35 “Lightning” Joint Strike Fighter.

To reiterate: the total projected cost of the most ambitious plan for a long-term upgrade of Northeast Corridor Rail infrastructure is $151 billion. The amount by which the F35 program is over budget, so far, is $163 billion. It really helps to count the zeros.

Two P. S.’s

1) It is widely known by economists and smart people everywhere that quality public transportation facilities increase real estate values. The city of London has capitalized on this obvious fact to fund rail improvements with levies on the windfall gains that the railroads have created. In Florida, a private concern, Florida East Coast Industries, has bought up lots of land around the terminals of a passenger rail service it plans to introduce between Miami and Orlando. Indeed, this is exactly the way the transcontinental railroads in the US were financed. Financing passenger rail improvements with taxes on land values is an easy, sensible and fair policy; we should start doing it immediately!

2) By the way: If you really want to get your mind boggled, you gotta check out Wikipedia’s page on Orders of Magnitude!

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Economics is Easy — Once You See the Trick!

by Lindy Davies

Last week, we found ourselves in between washing machines, the old one having died before the replacement arrived. So, when the laundry piled up, I drove 20 miles into town. To be honest I wasn’t upset about this. I had some correspondence-course lessons to read and grade while I waited. I shouldered the two big bags, secure in the knowledge that the foliage along the route was breathtaking, and the next couple of hours wouldn’t overtax me. I dumped my loads in machines, found a plastic chair near the door and started in on my paperwork.

A mother and daughter came dancing in and started piling and sorting with pizazz. I felt fortunate to have the paraphernalia of my work to look busy with, as I watched them. The mom was a beauty: quite short, flamboyantly redheaded and freckled. She had a laughing, elvish air — except that her eyes seemed to belong to a wiser and older being: bright, deep grey, creased and wry. The little girl was about six, and a bit darker — auburn instead of fiery red — and clearly thought her mom was the coolest person in the entire universe.

The mother was teaching the daughter the technique of the Old Shell Game, using three bottle caps and a little red pill. She would say “Timing, honey!” and “Don’t watch your hands, punkin,” and “Fold that pinky under…” while the girl practiced with tongue-clamped diligence.

I was so busy pretending not to watch that I missed the fact that I was being watched: she appeared — Presto! at my side. “I’ve read this book.” She was holding my copy of Progress and Poverty. “Jeez, that takes me back to a weird time in my life. It was the guy who taught me sleight-of-hand, a fascinating and evil fellow. The book was on his shelf; I don’t know if he ever read it.” She shook the book a few times as if its ideas rattled with a familiar sound. “I wasn’t feeling that much need to sleep, in those days.” She laid a finger beside her nose, rolled her eyes and gave a small sniff, as if to explain. “I think I must’ve read this thing straight through. But I haven’t thought about it in a long time.”

I asked her if she were still a sleight-of-hand artist. “Not professionally, but — yeah, I can pretty much direct the eyes away from the business at hand.” I followed her eyes to the little girl, who was struggling to retrieve the little red pill from beneath one of the washing machines. “Monica! Jeez.” Monica’s mom produced a little bottle of ibuprophen from her bag and took out another pill. “Really. Take it easy, honey!”

Monica accepted the pill sheepishly and went right back to practicing. “I keep gettin on the wrong side of it.”

“My name’s Ramona.” She thrust out a hand as if to shake mine, and handed me my wallet. “There you go. My husband and I and the girl moved up here two years ago from Ohio, where we learned Henry George’s lesson the hard way.”

I introduced myself, trying to stay cool as I replaced the wallet in my back pocket, and explained that I’d also just moved to the area, with wife and boy, from New York City.

“I think I could’ve liked New York,” Ramona mused, “Lots of decent magicians there. So, are you a Henry Georgist?”

I admitted that. I asked Ramona what she had meant about learning Henry George’s ideas the hard way.

“Ohh, that’s a story that old Henry George would appreciate. Do you have time for a story? I suppose you do.” She looked far away for a moment, as if the tale might be too sibylline for chance encounters in laundromats. “Ahh, well. I met my husband, Greg, when he picked me up hitch-hiking at the corner of High and Gay streets in Columbus, Ohio. I had sustained a few beatings at that point. Inside and outside. High and gay. My self-image was lower than it needed to be.”

At some point, as Ramona said on, I noticed that little Monica’s hands had stopped moving, and mine had, too.

“Our experiences could hardly have been more different, but emotionally we were in the same low place. He thought he wasn’t worth a shit, and I knew I wasn’t — but, he was in for the long haul. I went on to have love affairs with his three best friends —  before my, y’know, my personal mud settled to the bottom of the pond — who knows how, or why, people’s lives get knitted together? The five of us shared a huge adventure. You know, I said he fell for me, but I wasn’t his first love. Greg’s first love was the earth under his home town, Elmwood, Ohio. There were things to love about that town; he made me sorta love it, too. One of those things was the ancient Indian mounds they have in Central Ohio. Some of them are famous, but most aren’t. Some were plowed over by farmers before anybody knew. Anyway, one day he took me on a hike, past the golf course, through a stand of woods, over a crik, y’know, a walk like that was his favorite thing to do — but he wanted to show me this place he called Dragon Hill. So we got through to the edge of the woods, and there was a little hill, very steep, not like any of the other hills around there, with one old, gnarled maple tree on it. He said there was this shape, this effigy on the top of the hill. He said it had a long coiled tail. We climbed up; I stood there. I couldn’t see anything but grass. Greg took my hand and stooped down to make me feel this little depression in the ground on the hilltop — just a, little depression, maybe the size of a bowling ball, but smoothed-out. This meant nothing to me. But then he walked me four steps over, stooped down again and made me feel this rock — this dark red, smooth, polished rock that was like three-quarters buried in the ground, and — My God! It was the thing’s eye. And there it was, I saw the head, the legs, the coiled tail, just like it had — risen out of the ground, before my eyes! And I went and grabbed this poor guy and tackled him, just about had his clothes ripped off before I realized what I was doing.” She lifted up both her hands, palms upward. “I don’t know what it was. I don’t know — what it was. The sex thing was just — panic. I was shaking! He was too. Something. Had happened. To us. At that place. I’m shaking now, thinking about it.”

Ramona tossed her head quickly about, walked over and quickly tickled Monica’s armpit, and gestured for her to go back to practicing her shell game. “It was Greg’s idea to build a house there. Not for our little nuclear family; that came later. We decided to build a place for the five of us, we were going to make create our own kind of family. After a while, the other three started calling us ‘Mom and Dad’ — it was a kind of mean joke on Greg, and yet it was also kind of true. Somehow those years just seemed to happen, without my say-so — it was a long, sweet story, with just enough pain.”

One of her washers stopped spinning and clicked off. She spun back to her work, emptying little-girl and old-man clothes into one of the wheeled baskets. As she went on with her story, she made wordless comments, gigglingly affirmed by Monica, about the rippedness or dorkyness of various bits of clothing.

“Dragon Hill was on farm that was owned by this crumpled-up woman named Jimison. I never knew her first name. She lived by herself in a big, old farmhouse. We went and asked her if she’d sell us a little piece of land containing the hill. She kept us standing there on the porch for a long time. Finally she said, Yeah, you can have it; it’s no good to me. But I won’t take money for it. She turned this evil eye of hers toward Greg, and she said, I’ve seen you up there. Yes, I’ve seen you. You bring me the dragon’s other eye, and you can have the hill. I am like, The dragon’s other eye? Are you fucking kidding me? But I had to hand it to Greg, he kept his cool. He asked her if that was really her deal. She said yes. And you know what? It never occurred to him not to believe her. Greg started right in doing research. And then, I couldn’t leave, y’know? I mean, how could I have left, in the middle of this? He haunted the local library, he talked to all the old folks who might remember something. Somehow he managed to track down this old guy, this guy out of some weird movie. He lived in a shack beside a tobacco farm in North Carolina. The old guy had, there, in his shack, beside a tobacco field in North Carolina, a smooth dark-red stone about the size of a bowling ball. Greg suffered some broken bones getting his hands on that stone. I wasn’t along on that trip, and I never got the whole story, but — well, that October, he came back. Walking on crutches, straining to carry the stone in a vinyl bowling-ball bag. He rested and healed through the winter. As soon as the ground thawed next spring, we set the other eye back in the dragon’s head. Jimison couldn’t believe it. She acted almost as scared of us as we were of her. Looking back now, I think it was her reaction — how freaked-out she seemed — that made me suspect the whole thing was real. She said, Take it! It’s yours. And slammed the door in our face.”

I could still hear the tiny scraping of little Monica’s bottle caps on the smooth table, but every other conversation, whining kid, spin cycle, dryer alarm had gone silent, as if to give Ramona a few seconds, all she could get, with what she remembered. I was, of course, dumb; I couldn’t have spoken to claim a Megabucks prize.

“We started digging, like we never dug before! We disturbed — respectfully I hope — someone’s ancient rest. That was a crazy day. We got sore, sorely tired and sore. Our three strong men did most of the physical work. Vallorie and I were less doughty, so we took jobs, to keep our homestead stocked with tools and food. And we got an apartment — for our evil selves — with a hot shower that the guys appreciated. We spent a whole summer and a fall, ramming earth. Very, very, very slowly we built ourselves a house out of rammed earth and local timber, with a nice-drawing chimney and an airtight wood stove. And we were comfy there, for a little while. The five of us. But — before long, those three started drifting off into their own lives, as we all knew, without ever saying so, that they would. They would come over on Saturdays to Mom and Dad’s house; they’d still help get the firewood in. But the writing on the wall was — we actually did have writing on the wall, by the way, our walls were decorated with hundreds of quotes and sayings, you could spend a very happy forty minutes walking around and reading them. And then little Monica came along.”

I suddenly had a vision of this Greg fellow, helplessly smitten from the start, waiting and waiting, finally turning over one wintry morning to embrace his heart’s desire. I whispered, “You were all set.”

“It seemed that way. Yes, it did. I had old lovers who’d become my best friends, I had a husband who adored me, I had a beautiful little girl — I don’t know where this munchkin came from —”

Monica blew a big wet raspberry.

“And, are you familiar with rammed-earth construction? It’s really like nothing else. It seems like a natural rock formation. In the shape of — your house. So, you see. We had every right to that little piece of land, we’d put blood, sweat, hard work and spirit into it; we built a thing that will be there as long as that dragon will. But old Jimison taught us Henry George’s lesson the hard way. Ohh, yes, she did. One morning a gang of heavy equipment came banging up Jimison’s lane. She wasn’t there. She was nowhere to be found. Pretty slick, huh? We had never seen a ‘for sale’ sign — but she took the proceeds from her farm, and blew off to wherever the hell she blew off to. I have to admit, I kind of admired that. She was calm and cool while she played us.”

“Holy shit. So you got nothing?”

“Not quite that melodramatic. There were no legal documents of any kind, but the whole county had seen us building our house — hell, the local paper had come out to interview us. We were told that we could recover the value of the house — good thing they didn’t know how ill-prepared we were to sue anybody! But the developers settled. They gave us fifteen thousand dollars, with which we paid down on ten nice acres over on Knox Ridge. And I assure you that we have full, legal title to this bit of real estate.”

Those new-moon eyes of hers let me know, that she knew, that I could think of nothing to say; she didn’t mind, and besides, there was laundry to finish. She gave Monica a loud kiss on the head and we went back to work, she to folding, and I to distractedly staring at my lessons, as my dryer-loads finally got going.

Maybe ten minutes later, Ramona came back over to me. “You know, I just remembered something about that book, Progress and Poverty. You know what really impressed me about it? What really made me think this guy’s kind of a genius?”

“What?”

“It’s where he says that economics is easy, once you see the trick.” Ramona seized the three bottle caps from Monica, whose eyes lit up. While she spoke, she began to whip the caps around, and neither her little apprentice nor I had the slightest chance of following that pill. “The odds are definitely against you!” Ramona grinned. “But no, I’m serious. Why would I have remembered a book about economics? Feh! It’s the opposite of a sexy subject. I mean the exact opposite. Your turn, honey!”

Monica went back to her laundry-table stage, wiped her hands professionally on the front of her overalls, and said, “Follow the rent, bet you can’t!” She deftly shifted the caps around for a while, revealing the little red pill here and there, and then she gave me an opportunity to choose, while her mom, loading a dryer, watched with pride. I picked. The pill wasn’t there, of course, although I did sort of see the technique through which it came not to be. I didn’t let on, but Monica said, “Rats. My pinkies are too small!”

“Honey, how can they be too small, if they keep getting in the way?” Ramona winked at her. “You’ve almost got it!”

I ventured to comment, “She’s going to make lots of money, before long.”

“Oh, no, no, that’s not what it’s about, and she knows it. Nimble fingers are useful things, but I don’t believe in gambling, anymore.”

“I see. So, no mother and daughter streetcorner hustles, huh? Wow, the two of you could clean up in Central Park.”

“No ill-gotten gains for Monie and Monnie. In fact if I ever find out she’s extorted so much as a nickel from any other kid, she’s gonna be in truh-bull! Right, my darling?” Monica gave us a very big and sober nod, but there was a sparkle behind it.

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Nobody’s Neutral about the Net

-Lindy Davies

The Internet is, like, the coolest thing ever. My kids, aged 17 and 14, can’t conceive of life without it. Back in the day, it used to be called “The Information Superhighway” — but it’s more than that, now. It’s become almost a sort of worldwide collective mind, connecting us in ways what evolve faster than they can be interpreted. Back in 1990, I organized a free public seminar, an introduction to the Internet. It was held in a room that seated 50 people, and about 150 showed up. People stayed to stand in the hallway, almost entirely out of earshot of the speakers, trying to glean whatever they could. We all want to be connected. Perhaps we all need to be connected. How It All Started The Internet started out as, arguably, the single most important by-product of US military spending: the ARPAnet, whose original mission was to provide an invulnerable command-and-control network. The basic idea was to break messages up into packets, each of which carrying instructions on how to reassemble them at their destination. These packets would be sent out into the network, using whatever pathway was open. Thus began a network that could still function even if big chunks of it (say, the Washington, DC and New York metro areas) were vaporized in a nuclear war. Such a network would carry digital messages — and it began to dawn on us that any old thing — be it music, books, photos, cartoons of the Prophet, video games — can be poured into an electronic tube in the form of ones and zeros, and decoded at the other end. The most neato thing of all, the thing that gave the Internet its nerd-heroic revolutionary ethos, is that it was participatory. Essentially, every user of the Internet would have equal access to every other user — and to a significant extent this remains true, even in these days of massive mass media. If you have a cell phone and a Net connection, you can report the breaking news. And, if you’re creative, savvy and lucky, it’s possible, with a very low initial investment, to get your Web content up in front of millions of viewers. This has been a boon to advocates and activists of all kinds — and a few notably successful entrepreneurs. We’re All Content Providers The Internet companies that have made it biggest have been those who have found the best ways to leverage their users’ input. Google sells advertisements whose effectiveness are maximized automatically by association with the things people choose to search for. Ebay monetizes the crap in everyone’s basement by letting people present it, for free, to those who want to buy it. And Facebook! I often look at Facebook, over morning coffee, and wonder what the heck it’s good for — but it’s amazingly good at what it does. Facebook takes the genius of Google and Ebay a step further: not only does it expertly remind you about the stuff you’ve thought about, looked at or purchased — it does so in the context of the world’s favorite time-wasting hangout. I would not be surprised if a study were to show that Facebook users exist in some sort of hyper-relaxed hypnotic state: Like… yes, and share… All of these incredibly successful Internet firms rely on their users to be content providers. Yet, notwithstanding the amazing variety of cool stuff you can do with the World Wide Web, in physical terms it is just a way of transferring digital files from one computer to another. You can dump coded 1’s and 0’s into many kinds of pipe — and the pipe you want is the one that can reach as many users as possible. Initially, this was the telephone system, with its universal service, as was mandated in the US by the Communications Act of 1934. Among many other provisions, this law designated telephone companies as Common Carriers. This meant that they had no responsibility or liability for the information their lines carried, and that they could neither refuse nor discriminate against any caller because of anything said over the phone. As you would expect, Internet Service Providers (ISPs) initially had every incentive to act as common characters. It was the textbook example of what economists call a “network externality” — the more ideas, innovations, philosophy and porn its users provided, the more people would want use the Internet. This didn’t tend to overload the information-carrying capacity (the bandwidth) of the phone lines, because in the beginning, the Net transmitted information in the form of text. People accessed the Net using dial-up modems (the ones that made the weird skritchy noises when they connected); the fastest ones pulled in 56K bits per second. Right now I am using a DSL Internet connection, whose speed is on the low end of what is currently called “broadband.” My wife is downstairs watching a streaming video, and my laptop just recorded a download speed of 3.9 M bits per second — in other words, 69 times faster than the old dialup days. Back then, we thought the Internet was way cool and full of potential, but it wasn’t a pop-culture thing. It had a learning curve, and a lingo of its own, and this gave rise to a culture of proud geekery. Nerdiness slowly became hip. We also thought that the day of streaming video on demand was about as far in the future as Star Trek’s live-streaming of human beings. Moore’s Law Marches On Internet Culture, however, was on a collision course with the Net’s emergence as a pop phenomenon. Little by little, it got easier to use. There was no stopping it: text-based interfaces gave way to graphical browsers (which were given away free). Online commerce boomed, following the lead of Jeff Bezos, who shipped Amazon.com’s first book from his garage in 1995. Over the last fifteen years the Net has changed the way just about everyone does business. And, the list of feasible online wonders keeps expanding, to the tune of this crazy little thing called Moore’s Law. Intel pioneer Gordon Moore articulated the principle that sheer data-processing power tends to double every 18-24 months. This has held true for over three decades. While the laws of quantum mechanics prohibit this process from going on forever, predictions of when the Moore’s Law Curve would flatten out have repeatedly been pushed into the future. “In 1976,” writes Jonathan Strickland, “the Cray-1 was state-of-the-art: it could process 160 million floating-point operations per second (flops) and had 8 megabytes (MB) of memory.” The laptop on which I’m typing these words has an Intel i7 processor that can process 113 billion flops, and has exactly 1,000 times the memory capacity of the ’76 Cray. Things have gotten way faster. It may never be possible to store entire human beings in computer memory (Star Trek’s transporter is the ultimate, I guess, in Cloud Computing) — but I can now watch Star Trek on my laptop anytime I want, even at the relatively pokey download speeds available in rural Maine. The Internet has entered the era of streaming video — and that is what has made the issue of “Net Neutrality” so huge. Streaming video uses a tremendous amount of bandwidth. Netflix and YouTube alone account for more than 47% of the overall downstream bandwidth use in the US today. Net Neutrality is the principle that ISPs should be “common carriers.” The so-called “last mile” providers, who own the wires that bring the data to your home, enjoy a monopoly. According to Net Neutrality advocates, they have no business discriminating against any of the data coming through those wires. People get very emotional about this (I think the wonderful Vi Hart offers the most listenable explanation, but John Oliver’s excellent rant is a must-see, too). The Internet’s character as a wide open frontier, with equal access for everybody, is what made it such a fertile ground for innovation and creativity. If we allow ISPs to pick and choose the data they transmit to us, we’re on a slippery slope. Big money will pay for big pipes. The Internet gave normal folks a seat at the Grownup Media Table; now Big Cable wants to take it all away. The case for Net Neutrality seems pefectly obvious — and that is how advocates present it: as a simple standoff between We the People and the forces of Corporate Privilege. Cui Bono? Network Neutrality started becoming widely debated after certain bandwidth-hogging services became popular. (Before that, it wasn’t a front-page issue, because Net Neutrality wasn’t widely perceived as threatened.) First it was peer-to-peer file-sharing by services such as BitTorrent (including lots of illegal copies of copyrighted TV shows and films). A 2007 lawsuit against Comcast, the nation’s largest cable company, forced it to stop blocking BitTorrent. Recently, controversy ensued after Comcast slowed down Netflix service to its subscribers. The dispute was settled this past February when Netflix agreed to pay Comcast for faster, more reliable service. This agreement, of course, violated the principle of Net Neutrality. A few technical observations will help us to understand the issues here. Back in the days of dialup modems, many local companies competed to provide Internet access; they all had equal access to the phone lines. As demand for broadband grew, however, Internet service started to depend on privately-owned wires, of either the phone company of the cable-TV company. Because most customers have only one set of these wires available, ISPs effectively have a monopoly. The Net Neutrality debate centers around the behavior of these ISPs, which provide the vital “last mile” service to individual homes. The ISPs deliver content; they don’t provide it. Content comes to individual users from the worldwide Internet, via the ISPs. The abandonment of Net Neutrality, we are told, will allow the establishment of a “fast lane” for providers with deep pockets. However, ISPs aren’t able to deliver content any faster than it comes to them through the worldwide Internet. ISPs cannot actually speed up data; they can only slow it down — and they contend that bandwidth-heavy services clog up their currently available capacity, slowing down service for everyone. In the early days, all users of the Internet shared the infrastructure through which Net data coursed: the Internet backbone. Today, however, there exists a “fast lane” through the Internet that has nothing to do with the last-mile providers. Large content providers such as Netflix or YouTube use content delivery network (CDN) technology, which sets up cached versions of their content on servers close to high-demand areas. This greatly speeds up the delivery of the video content to the ISP — and, it greatly increases the volume of data the ISP must handle. Some ISPs have blocked content from some CDNs; others have negotiated payment agreements. Now, if one company, by utilizing a paid CDN service, is able to get faster speeds, is that not establishing a “fast lane” and violating neutrality? Well… it’s certainly establishing a fast lane, anyway — and that is how today’s Internet works. If every packet of data were required to be treated just the same — in other words, if no proprietary way-clearing equipment were allowed — most users would get poorer service than they do now. How Will We Get Our TV? The key factor in all this is that only recently have on-demand movies and TV series on the Internet become commercially viable. Before that, we consumed TV shows in broadcast form — all at the same time — either via a broadcast antenna or a cable subscription, and we consumed feature films either in movie theatres or by renting the physical media. One might ask why it’s so hard to get videos on the Internet, when we’ve been getting hundreds of TV channels through coaxial cable for decades. The difference is in the way the signal is provided. A broadcast TV show is provided via a certain frequency through a cable. It is only available at the time of broadcast. One signal can be sent to the node in, say, each apartment building, where it can be split among 1-200 subscribers. However, the consumer of a streaming video on the Internet can start the show anytime, pause it and resume it later, and simultaneously have access to the full range of sites on the Web. An Internet TV show takes up a bunch of bandwidth, which must be dedicated at that specific time to each individual user who clicks on it. That is the case for all Internet content, of course — but websites and still images take up so much less bandwidth that millions of them can bounce back and forth without degrading anyone’s service. The key to ensuring fair and innovative Internet service is competition. Under current conditions, cable or telecom companies have a monopoly on last-mile Internet service. However, there are a number of interesting developments that can, potentially, invigorate competition among Internet providers. Indeed, many commentators argue that mandating Net Neutrality rules now would stifle various forms of technological innovation, and weaken Internet service across the board. Until very recently, cable companies have been mainly in business to deliver broadcast-model cable TV via established cable networks. As demand for that service falls, they will have more incentive to devote bandwidth to Internet services. In a way, the Net Neutrality debate comes down to a conflict between two types of Big Player — the ISP, such as Comcast, and the large-scale content provider, such as Netflix — over who is going to pay for increased capacity. Each wants to preserve the viability of its own business model — but in the end, the market is going to decide who wins. Possible Sources of Competition Folks in big cities have their zippy cable modems — but, DSL service through regular old twisted-copper telephone wires is still the most prevalent form of broadband service. New technology is under development that promised to achieve Gigabit speeds over regular phone lines (i.e., some 20x faster than my Star Trek stream). It would require step-up boxes within a quarter mile or less of the home, but current DSL systems also require local boxes, only a bit less frequent — and if the market is there, there’s a good chance the hardware will be provided. The next generation of cable technology also promises considerable improvement in download speeds: the race is on. It’s worth noting that any system that reliably steams high-quality video will have no trouble handling the less bandwidth-intensive needs of all of us lowly content providers who offer mere journalism, art, poetry, advocacy, education — content, that is, in the form of text and images. In today’s market, the cost of storing and transmitting such things has been cut, effectively, to zero. This is not to say that fabulous, as-yet-unheard-of new applications might not require considerable bandwidth. Who knows when the next Google or Facebook will show up? But when it does, it will emerge on the open Internet, just as all those other sites did — and, in today’s market, when content becomes popular enough to need extra delivery capacity, content providers can afford to buy it. Many people, of course, have ideas to share or programs to promulgate, things that are very important to them, yet have failed, thus far, to “go viral.” Is the next phase of the Internet going to pass these good people by? It’s conceivable — but it seems to me that this ship has already sailed. The Internet has been a very, very big place, for some years now. Yet, it’s worth noting that neither ISP monopolies not bandwidth limitations have kept anyone from viewing the video of NYC police officers choking Eric Garner. The Internet’s democratizing potential is still strong. How About Municipal Broadband? Finally, there might be one more way to ensure that there is healthy competition in the ISP market. Some — including, lately, President Obama — have advocated municipal investment in broadband service.  This would be one way to keep the big-cable ISPs on their toes. Big Cable recognizes this, because its lobbyists have been working overtime to get states to pass laws to restrict or prohibit the practice; such laws are on the books in twenty states. Tennessee, for instance, prohibits cities from establishing municipal broadband in an “area where a privately-held cable television operator is providing cable service.” Apparently Chattanooga got in under the wire, though, because the city (pop. 171,000) has provided fiber-optic cable directly to every home in it. It accomplished this feat along with an upgrade to its municipally-owned power grid, and it was funded by a combination of Federal stimulus funds and municipal bonds. Chattanoogans can get full Gigabit service for $350 per month, but most opt for the affordable 30 MB service — six times faster than the national average. Chattanooga’s fiber system carries TV and telephone signals as well. Not only is it expected to start showing a profit this year, it also makes possible a slew of other money-saving innovations, such as a smart electrical grid, traffic lights that respond in real time to changes in traffic patterns, and vastly improved responses to outages. It’s the wave of the future, and Chattanoogans are quite happy to be surfing it. Skeptics of the “Net Neutrality” position argue that Internet service is qualitatively different from public utilities such as highways, or electrical service (and the deregulation of wholesale electric power over the past few decades has yielded strong efficiencies). The key difference, they argue, is that Moore’s Law continues to be in effect; unfettered technological innovation will continue to yield unpredictable benefits, and should not be hindered by regulation. Everyone, however (everyone, anyway, who isn’t paid by Time Warner/Comcast) agrees that lack of competition in “last mile” Internet service hinders progress. Where will this competition come from? Well, it could come from a number of sources. Successful implementation of Gigabit DSL service, for example, would provide a strong competitor to the cable companies. Or, fiber-to-the-home could blow cable out of the water. This could be done by local governments, as in Chattanooga (and in Wilson, a town of 50,000 in Eastern North Carolina), or by private companies, as Google has been doing in Kansas City, Missouri. But, if such an infrastructure improvement would be cost-effective or even outright profitable for a city that undertakes it, it’s hard to see why a city would have to wait for the largesse of a Google. Public investment in local broadband is simply good municipal policy. If it is, and to the extent that it is, the Henry George Theorem tells us that it will fully pay for itself in higher land values. Don’t you think that cheap, reliable high-speed Internet service will move Chattanooga, Tennessee up on the list of desirable places to start a business? There’s no doubt that people prefer places with high-quality, reliable infrastructure. There’s also no doubt (though this is a fact that is less widely understood) that the very best way to pay for local infrastructure is by taxes on land value — after all, it is precisely those public investments that have created that land value in the first place. Undoubtedly, Internet service is a “public utility” issue — which is why the Net Neutrality debate has been so fraught and passionate. But the answer isn’t to try to restore the Internet to a bygone era of “neutrality” that merely rations existing capacity. The answer is to let a million technological flowers bloom — and when they do, remember who rightfully owns the ground they’re growing in. So, join hands, everyone — all together now: What do we want? Municipal broadband! How do we pay for it? The land value tax! I can’t hear you! Come on — say it again now, much louder:

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