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Monday, October 31, 2005

Internet Freedom

Something interesting, laughable, and also scaring has been happening recently. Various nations, including China, Iran, Cuba, and the E.U. have been trying to get the U.S. to hand over control of the internet to the U.N. An editorial in the Rocky Mountain News (http://www.rockymountainnews.com/drmn/opinion/article/0,1299,DRMN_38_4192676,00.html) points out the reason they want this:

"It doesn't take any great insight to realize that what most of these countries want is control over the information their peoples have access to. It's a short step from controlling the means of communication to controlling what is communicated."

Kind of scary considering China (http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/09/18/MNGDUEPNLA1.DTL&type=tech) regulates what people say on the internet:

"U.S. tech giants are helping the Chinese express themselves online -- as long as they don't write about democracy, Tibet, sex, Tiananmen Square, Falun Gong, government corruption or any other taboo subject."

Even scarier since within the past year there has been enough corruption scandals and sex harrassment scandals to make its headquarters look like a prison where the criminals run free. But let's look at this from an economic perspective. First, let's review the 3 reasons for government intervention; externalities, monopolies, and for public goods. No third party is adversly affected by the internet. Many companies, governments, and consumers have benefited greatly from the internet, but they are taking part in market transactions over the internet, so to say they benefit from positive externalities would be a case of externality abuse.

The second reason government might get involved in the internet is if it's a public good. Public goods are non-rival - meaning consumer aren't competing for resources - and non-exclusive - meaning consumers can't be excluded from enjoying the benefits of the good. However, consumers compete for transmission channels, which affect transmission speeds, making this good rival in consumption. They can also easily be exluded from the internet, which is why people have to pay ISP's like Adelphia in order to get internet access. A rival and excludable good certainly isn't a public good that needs to be controlled by the U.N.

Before I get to analysing whether the internet is a monopoly, I want to explain a couple of things about the internet to avoid any confusion. No one owns the internet. However, the U.S. does define the property rights to it. Everytime someone logs onto the internet, they are assigned a temporary numbered address. ISP's purchase a number of these from the U.S. (or an agency under it's supervision, which would be the government's way of controlling monopolies) and in turn the ISP's sell them to customers like me. Businesses are interested in keeping the same adddress at all times, so they get there own and assign it do there domain name. So when you go to ebay.com, you are really going to a numbered address. The ISP's translate the difference. The U.S. controls this so that there are no duplicate domain names or addresses. Also, domain names are divided into .com, .gov, .edu, etc. Since the U.S. doesn't want people typing in a .gov address and getting an Iranian government website that advocates "death to the infidels," they don't let other governments use .gov. Instead, other nations get domain names that end in .co.uk for the UK, .co.au for Australia, etc. The UN wants control of this, along with the ability (with the help of microsoft and yahoo) to censor what is said on the internet. They get this ability because they can track down perpetrators via their internet addresses. With all this said, let's talk about monopolies as they pertain to the internet.

If one company owns the internet, then the government should step in to make sure the company acts efficiently. No company owns the internet, so the government should keep out of efficiency questions on the internet, which it does. The U.S. does have a monopoly on property rights, as viewed by other nations, which could lead other nations to argue the UN should step in for efficiency reasons. However, aside from the fact that the UN isn't usually efficient-minded, but rather control-minded, there is another reason the U.S. should retain control - national security. U.S. control makes it difficult for other nations or even the UN to censor or inhibit speech, such as pro-U.S. speech.

U.S. control over the internet insures other nations cannot abuse any power over the internet to harm the U.S. or its citizens. The U.S. must retain its sovereignty, because other nations are hostile towards us. It is our government, so for efficiency purposes for us, U.S. citizens, it should retain control of the internet. For us citizens at least, this is efficient. Therefore we, as U.S. citizens, should support the U.S. government's decision to retain control of the internet.

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