INSIGHTS: NET NEUTRALITY PROVEN TITANICALLY STUPID BY NET NEUTRALITY PROPONENTS
By Guest Columnist Seton Motley:
President, Less Government
Reprinted with permission.
Network Neutrality has for more than a decade been all the rage on the Left. Emphasis – as is always the case with the Left – on rage.
Especially so now, as the Donald Trump Administration’s Federal Communications Commission (FCC) is in the process of rolling back said power grab – along with the equally ridiculous imposition on the Web of 1934 Title II landline telephone law. All imposed just two years ago by the Barack Obama Administration’s FCC.
Net Neutrality is the titanically stupid insistence that Internet Service Providers (ISPs) treat each and every thing on the Internet exactly the same.
For instance, emails from Nigerian princes – deserve equal access to you as does a doctor performing your remote, online Lasik eye surgery. If that causes your surgeon’s connection to buffer and stall – well that’s just too bad. You didn’t want to read those Nigerian prince emails anyway.
We less government types find Net Neutrality and Title II to be titanically stupid for at least two reasons. It is antithetical to the Constitution and to even a rudimentary understanding of economics.
Constitution: Net Neutrality is a blatant assault on at least the First and Fourth Amendments.
First Amendment: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
Fourth Amendment: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”
All emphasis ours (as the Founders’ quills did not contain the bold feature).
The ISPs have spent more than $1 trillion building their networks. They are thus their networks. They can assemble said networks any way they wish (First Amendment) – completely free from government interference or imposition.
Net Neutrality is the government mandating how ISPs will assemble people upon their networks. A First Amendment no bueno.
And certainly with the Title II imposition, the government is executing a massive, unreasonable, unwarranted seizure of ISPs $1+ trillion worth of private property. A Fourth Amendment no bueno.
Economics: Net Neutrality bans all sorts of normal business practices in which every other business on the planet engages all the time.
The government Post Office charges you different prices for different speeds of delivery. But Net Neutrality is the government – prohibiting ISPs from charging different prices for different speeds of delivery. No hypocrisy there.
And, of course, businesses everywhere charge different prices for differentiated levels of service. And, of course, you would very much like your eye surgeon to be able to purchase a faster, dedicated, uninterruptible Web connection in preparation for his taking a laser to your optical orbs.
Net Neutrality is simply bizarre, anti-Reality policy.
And, of course, every single Net Neutrality advocate engages in exactly the sort of business practices and avails himself of the exact same Constitutional freedoms – which he wants to have the government ban for ISPs.
Online retail titan Amazon is a huge Net Neutrality proponent. Let’s leave aside the crony fact that they use a ton of bandwidth – and Net Neutrality prohibits ISPs from charging them for it. When you order products from Amazon you can choose at least three different delivery speeds, which the Net Neutrality they champion prohibits ISPs from doing.
Web domain giant GoDaddy is a huge Net Neutrality proponent. They cancelled the domain name of a white supremacist website. I.e., GoDaddy is assembling their private business exactly the way they wish – completely free from government interference or imposition, which the Net Neutrality they champion prohibits ISPs from doing.
Google is the king of the Internet. They are a nearly $1 trillion business – all by their onesies. Three-quarters of all U.S. Internet searches are conducted through Google.
Like Amazon, Google too crony benefits from Net Neutrality’s ban on ISPs charging them for their massive bandwidth consumption.
Like GoDaddy, Google banned the same white supremacist domain name when it was registered with Google. This is Google, like GoDaddy, assembling their private business any way they wish – completely free from government interference or imposition, which the Net Neutrality they champion prohibits ISPs from doing.
Google also recently fired engineer James Damore after Damore’s private memo about Google’s diversity (or lack thereof) was leaked to the public.
Google is perfectly within their rights to do this. As they continue to work to assemble their private business any way they wish – completely free from government interference or imposition. But the Net Neutrality they champion prohibits ISPs from doing exactly the same thing.
Net Neutrality is titanically stupid policy. In no small part because it clearly violates the Constitution – and the very basic laws of very basic economics.
All of which explains why the Left are such huge fans thereof.
ON THE ECONOMY: HOUSE OF THE RISING SUN
By John Dunham, Managing Partner:
John Dunham & Associates
There is a house in New Orleans, they call the Rising Sun, and it’s been the ruin of many a poor boy, and God I know I’m one.
The classic Animals hit from 1964 begins with this iconic run-on sentence. According to folk historian Alan Lomax, “Rising Sun” was used as the name of a bawdy house in two traditional English songs, and the melody is related to a 17th-century folk song, Lord Barnard and Little Musgrave.
When I think of the Rising Sun, I hearken back to the signing of the Constitution in Independence Hall in 1787. George Washington was chairman of the Constitutional Convention and sat in a chair with a sun motif on the top. At the end of the Convention, future President, James Madison reported Benjamin Franklin as saying, I have often looked at that behind the president without being able to tell whether it was rising or setting. But now I… know that it is a rising…sun.
While the sun has risen and as continued to rise on these United States, so to have tax rates and tax complexity. Back when the Constitution was enacted total government revenues – that is state, federal and local revenues were equal to about 4 percent of total GDP. Today, this has risen to about 26 percent of GDP according to the Organization for Economic Cooperation and Development.
This is well above levels seen prior to the Obama Administration but is well below the levels seen back in 2000. Unfortunately, while tax revenues have not grown dramatically debt levels have, with federal receipts accounting for only about 70 percent of federal expenditures. It is in this environment that the debate over tax reform and tax cuts is taking place.
One of the signature promises of the incoming Trump Administration was that we were going to see a giant, beautiful, massive, the biggest ever in our country, tax cut. Now, the President is fond of hyperbole, but in this case it looks as if the bills being considered in Congress right now are not all that beautiful and they likely do not offer massive tax cuts. One thing is certain. At 440 pages the House tax bill is not simple.
At John Dunham & Associates, we have been scoring federal tax proposals for some time using a dynamic scoring model that takes into account changes in wages, GDP and inflation (among other factors) to determine how a tax bill will impact the economy. While we are still working on examining the ever changing provisions of these proposals three things do seem to stand out.
First, the corporate side of the proposal is much more important economically than the individual side. Lower corporate tax rates and the elimination of distortionary provisions will not only grow the economy and lead to more jobs, but they will also increase spending and revenues on the individual side of the equation. If Congress does anything in this current round of tax writing, it should definitely reduce the corporate tax rate.
The second important provision is the move to a territorial tax system for corporate taxes. This would have two effects. First, it would expand the tax base in that it taxes all businesses on income earned within the US. This means that foreign entities will be taxed on their US business, and domestic entities would not have a way to easily move activity out of the US to tax havens like the Cayman Islands. Another effect being built into the tax reform efforts is a one-time transfer tax that will allow companies to tax unremitted earnings at a low rate, providing an incentive to either bring revenues back into the US, or at least to de-tax revenues and then park them back overseas.
With at least $2 trillion in cash being parked overseas, this provision alone means the difference between a revenue neutral (or even revenue positive) tax bill or one that adds to the deficit. Again, if Congress does nothing else, providing a means to de-tax these un-repatriated funds will benefit both the economy and the Federal fisc.
Finally, the current provisions relating to the individual income tax appear to be trapped in time. The individual income tax system in the US has developed over 100 years from a complex system to an extremely complex one. The Federal income tax always had tax brackets and exemptions, and was always designed to ensure that most people in the country were not subject to its most expensive provisions. Over time, every special interest in Washington has got a provision included in the code making it extremely complex to file for the small percentage of the population that pay the bulk of the taxes. The reforms being discussed do not fix these problems. There are still myriad exemptions designed to ensure that few people pay the tax, and the rates are still set to push the vast bulk of payments on to a small group of taxpayers. Our initial models of the bills suggest that the PIT might actually increase under the plans being considered, particularly as wages and dividend payments rise from the reduced corporate tax.
A better way to approach income taxes is to create a graduated rate schedule or a flat rate tax with a very limited number of exemptions. The rate could even be set negative for low wage households creating a form of Earned Income Tax Credit. The greatest benefits from a reformed Personal Income Tax would come from simplification.
Today billions of dollars are wasted and not directed toward economically meaningful activities as people pay professional tax preparers simply to fill out needlessly complicated forms. Unfortunately, since this reform effort is being nailed onto the existing system it is unlikely that any meaningful reform of the Personal Income Tax will be forthcoming.
The bottom line on this effort is that we are likely to see a rising sun for the economy as a result of corporate tax reform. However, it is unlikely that much will come out of the personal side – something that has been the ruin of many a poor boy, and God I know I’m one.
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