[governance] a reality check on economics

[David Cake]

On 20/05/2012, at 12:10 PM, Guru गुरु wrote:

> Milton
> 
> The first problem of your 'reality check on economics' is that it is basically extreme neo-liberal economic thinking-  let markets decide, least regulation is the best.

	I don't think Miltons praise of "powerful, well-resourced antitrust and economic regulatory agencies" and "antitrust authorities, privacy regulators and consumer protection regulators" constitutes extreme neo-liberal economic thinking. 

> The deregulation (repeal of glass-steagall for instance) as well as inadequate regulation of the financial markets is accepted as an important cause of the crash of the financial markets - and unfortunately while some sections of society made billions, the costs are being borne by others, most of who had no connection with the causes.

	And that was a case of deliberate legislative disempowerment of state regulatory agencies, which was pretty much the opposite of what Milton was advocating. 

> In the case of the Internet, which is a global phenomenon, we have no meaningful / democratic global regulation structures/processes yet. Which given the huge concentration of power is a dangerous situation and one which is no longer tenable. American regulation should not take the place of global regulation (remember wikileaks and paypal etc etc which is one of the cases the joint civil society statement/ background note highlights). And here I am quite aware of your concerns about American domination as well... (one point of agreement!!). 

	While I wish there was a useful, meaningful, democratic global regulator there is not currently. And for the moment, US and EU regulatory agencies are the most effective check we have on the power of such companies - for example, the FCC privacy agreements with Facebook and Google. 
	I would be happy to see some increased international cooperation, but currently national regulators are the best we have. 

> Your text book definition of monopoly is not useful or relevant in this debate -

	If you mean something different to monopoly, use a different term. 

> if you believe that the large transnational IT corporates do not have huge market power (and use it to their advantage) then your ideology is clouding your vision of reality. Can I seriously not use google search engine or facebook?

	I know many people who use other search engines by choice, and who do not use Facebook. They have significant market power - but that doesn't make them monopolies. This isn't necessarily good - in many ways, oligopolies are worse than monopolies. 

> Neoliberal economics (aka market fundamentalism) is discredited and a failure and is no answer to our challenges in IG - it is infact the problem... 
> 

	Neoliberal economics might argue that less market regulation is always good, but I don't think anyone is arguing for that - rather, the question is what is an effective form for that regulation to take that is likely to ensure a good outcome. There are good reasons to be concerned about an international regulatory body, one of them being whether such a body would be likely to be democratic and open when some major states are not. 
	
> This does not mean (and sometimes you are eager to make this conclusion) that IT for Change is for the other extreme - Socialism or complete government control over the markets. I don't think anyone is making that argument. So your point about the failure of publicly funded search engines is superfluous.
> 
> As economists agree, we are all mixed economies and we need to find the truth somewhere in between.  The Internet itself gives us some new powerful methods for framing the processes for such regulation / policy making and while we debate the best way global democracy can be furthered, laissez faire is no option, and harmful as a governmental take-over of the Internet.

	I say again - an argument for strong state based regulatory agencies is not an argument for laissez faire - quite the opposite. 
	Regards
		David

> On 17/05/12 20:35, Milton L Mueller wrote:
>> The “geopolitical influence” of the US and Europe is quite different, since all major Internet corporations –in fact monopolies in their respective domain- are American : Google, Cisco, Microsoft, Apple, Facebook, e-Bay …  Nowhere in the APC statement these monopolies are addressed despite the strong links they have with Internet governance.
>> [Milton L Mueller] The dialogue on enhanced cooperation is becoming polluted with simplistic and inaccurate economic nostrums.
>> May I request that the word “monopoly” be used with at least some attention paid to its actual meaning?
>> From the MIT Dictionary of Economics: “a firm is a monopoly if it is the only supplier of a homogenous product for which there are no substitutes and many buyers.” This definition can                   be made less restrictive by relaxing the assumption that there are no substitutes, to include imperfect substitutes.
>> But even so, none of the firms cited above are monopolies. None. Some have varying degrees of market power in specific sectors, but none are close to being _global_ monopolies. Apple, for example, does not even surpass Samsung in its share of smartphones.
>> I am also curious to know what is going on when people group the regulation of equipment manufacturers (Apple, Cisco) under the rubric of “internet governance.” Same for computer operating systems.
>> Moreover, I wonder whether the people who think UN-based institutions are an appropriate response to market power in the ICT sector have done their homework. There are powerful, well-resourced antitrust and economic regulatory agencies in the U.S., Europe, and various other countries in Latin America, Asia and elsewhere. The operate under specific laws, not under a theory of resentment (that’s a good thing), laws which have evolved for decades and which have established precedents and bodies of research behind them regarding the nature of market power, the impact of regulation and antitrust intervention on innovation and consumer welfare, etc.
>> Moreover, it’s not like these firms are running amok. There have been in the recent past, or currently are underway, serious tangles with Microsoft, Intel, Google, Apple, and Facebook on various issues involving their market power* - by antitrust authorities, privacy regulators and consumer protection regulators. Have our agitators made a case that these entities are incapable of doing their jobs? If so, how would the political economy of regulating big business improve at the global level – or would it get worse?
>> Is the absence of European companies in the list of globally competitive firms, Mssr. Fullsack, due to some cosmic injustice, or simply to the over-regulated, protectionist, nationalist structure of European Internet and ICT markets, which does not produce globally competitive firms? Why is it that tens of millions in subsidies for a European search engine haven’t produced anything? Might it be because consumers decide for themselves what is a better service and that people don’t care much whether a service provider is American, European or Chinese as long as they can use their own language?
>> Could there be some serious engagement with these issues and, perhaps, a little more knowledge and a lot less populism? The idea that some vague notion of “governance” is going to save us from any and every problem in the internet economy sounds to me like the fulminations of wannabe politicians seeking power for themselves and not interested in actually solving problems.
>> (*Note the absence of Cisco from that list – the equipment mfring biz is highly competitive and Cisco is declining in market share, flat in revenue, and considered “on the ropes” by stock investors for the past 2 years). Huawei, on the other hand…
>>  
> 


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