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The Trump administration is suing California to quash its new net neutrality law
The Trump administration said Sunday it will sue California in an effort to block what some experts have described as the toughest net neutrality law ever enacted in the United States, setting up a high-stakes legal showdown over the future of the Internet.
California on Sunday became the largest state to adopt its own rules requiring Internet providers like AT&T, Comcast and Verizon to treat all web traffic equally. Golden State legislators took the step of writing their law after the Federal Communications Commission scrapped nationwide protections last year, citing the regulatory burdens they had caused for the telecom industry.
Mere hours after California's proposal became law, however, senior Justice Department officials told The Washington Post they would take the state to court on grounds that the federal government, not state leaders, has the exclusive power to regulate net neutrality. DOJ officials stressed the FCC had been granted such authority from Congress to ensure that all 50 states don't seek to write their own, potentially conflicting, rules governing the web.
Also at Ars Technica, TechDirt, and Politico.
Previously: California Gov. Signs Nation’s Strictest Net Neutrality Rules Into Law
(Score: 5, Interesting) by Arik on Tuesday October 02 2018, @06:15PM (5 children)
"A Free Market," properly defined, can solve all economic problems, perhaps not perfectly, but at least in a fashion closer to perfect than any alternative.
However "a Free Market" is also a platonic ideal, something that never quite exists in reality.
The takeaway if you really understand that is to start paying attention to the ways in which particular markets that *do* exist deviate from that platonic ideal.
The takeaway if you're a typical burger victim without the attention span to actually understand it, however, is that every market is perfect and can do no wrong.
Very very incorrect application of essentially correct axiom. Very very sloppy application. This is why semantics is not "just semantics" but vitally important!
If laughter is the best medicine, who are the best doctors?
(Score: 4, Informative) by Thexalon on Tuesday October 02 2018, @08:26PM (4 children)
Free markets work great if the following conditions are met:
1. There are lots of buyers in all markets.
2. There are lots of sellers in all markets.
3. Externalities (costs of producing widgets not paid by the seller during production) are eliminated or reduced to a minimal level.
4. The expense of the item in question isn't part of the point of buying it (what's sometimes called a "snob good").
5. There are viable options for one or both parties to walk away at any time.
So, for instance, markets enable most people who want a halfway decent pizza in the US to be able to get one delivered to their home at a very reasonable price. That's because all the conditions are pretty well met: Lots of people like to eat pizza, it's relatively easy to set up a pretty good pizza place to compete even with the big chains, most of the costs of making pizzas are priced in fairly well, nobody really wants to pay extra just to say they've bought an expensive pizza, and if you don't like any of the options for pizza you can cook your own food or order Chinese takeout instead.
The problem is that a lot of markets fail one of those conditions quite badly. And that wouldn't be a big deal if that affected 5-10% of the GDP worth of the economy. But they're actually affecting more like 40-50% of the GDP worth of the US economy.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by Arik on Tuesday October 02 2018, @10:27PM (3 children)
"1. There are lots of buyers in all markets."
Doesn't really have to be a LOT of buyers. Does need to be plural, certainly, at least two, and larger numbers are generally better, but no hard requirement on buyers or sellers.
"3. Externalities (costs of producing widgets not paid by the seller during production) are eliminated or reduced to a minimal level."
And there's a big one, that affects virtually every market on Earth. There's a ton of 'regulation' and most of it works to shift externalities to the benefit of the politically connected.
"4. The expense of the item in question isn't part of the point of buying it (what's sometimes called a "snob good")."
A free market in snob goods wouldn't be something I'd be proud of necessarily, but I see no necessary contradiction. The market for fashion doesn't seem to work that awfully, at least once you get past the fundamental propositions which the customers for that sort of stuff clearly have.
"5. There are viable options for one or both parties to walk away at any time."
Well yeah, strongly implied by the adjective 'Free.'
Also implied - lack of restrictions on entry to and exit from the market. This is another big difference - in real world markets, particularly the most lucrative ones, there are incredible barriers to entry, mostly the result of regulation.
And another necessary condition is that the buyers and sellers are accurately informed and understand what they're getting. This is what took the market for PCs off the rails, once the market grew large enough that people who had no idea what a computer even is were the biggest buyers, it became trivially easy for the manufacturers to adopt all manner of consumer-hostile actions without facing effective resistance.
If laughter is the best medicine, who are the best doctors?
(Score: 2) by Thexalon on Tuesday October 02 2018, @11:30PM (2 children)
The points about "lots" of buyers and sellers has to do with the degree to which individual players in the market have the power to set the standard market price of the product in question.
Now, in a market with only 1 seller, that seller has the power to set a price that is artificially high, because there's no risk of competition, which means that the buyers either have to pay whatever the monopolist demands or do without that product. How artificially high that price will be depends mostly on the ease of doing without the product: For instance, you might have a complete monopoly on selling a particular video game, but that's probably not going to boost the price that much because everyone can live perfectly well without that game. By contrast, a complete monopoly on a life-saving medication is going to be able to artificially boost the price a great deal, because the buyers can't live without it at all. The 2 major downsides of this are (1) it pulls extra cash from the buyers that might otherwise go to other things, and (2) it gives the monopolist no incentive to innovate technologically to reduce its costs of production because it's far easier to just squeeze the buyers some more.
You argue that with 2 sellers, things get better. They do, but not as much as you think, because now the only incentive you've added in to drop the price is to undercut the other seller. Whether or not this is a smart move is a matter of game theory and Nash equilibria. If your price is P, and you have C customers, you could drop your price to P' in the hopes of increasing your customer base to C', but that only makes sense if P' * C' is more than P * C, and there's the risk that your competitor will follow suit and lower their price to P' in order to hang onto those customers you just tried to snag and then you both just lost out. And there's a potential move in the other direction: You raise your price to P', risking the reduction of your customer base to C', but that is always a good idea if P' * C' is more than P * C, and if your competitor follows suit you'll both gain at the expense of your customers. As an example of this in action, prior to the days of Internet flight booking it was common practice for airlines to increase fares at about 4:45 PM on a Friday afternoon, wait until around 10 AM on Monday morning to see if their competition on those routes followed along, and if they didn't drop the fares back down again.
It takes around 10 sellers before the game theory becomes too complicated to adjust to, at which point the market is properly competitive, and the way to increase profits is to produce the product more efficiently or develop a reputation for higher quality that enables you to charge more.
The same logic applies to 1 or a few buyers, except that instead of keeping prices artificially high, they make prices artificially low, taking advantage of the seller's predicament that the only available options are "sell at below the right price" or "don't sell", and the seller may have already invested heavily in capital needed to be in the business and thus can't afford the "don't sell" option.
As for the bit about regulation, you don't seem to understand what externalities actually are. Another example of an externality: Your next door neighbor decides to turn their property into a garbage dump. Fine for them, but now the price of your property dropped a whole lot because nobody wants to live next to a dump. A zoning rule that made that illegal would not be an externality, it would be preventing an externality.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by arslan on Wednesday October 03 2018, @12:20AM
Actually it doesn't if the sellers are smart. In fact it can go up to 5-6 or even more. We call this "cartels" in banking and have had many examples where there were more than 2 or 3 parties involved to screw over others. Even when you have a dozen sellers, there can be cartels setup to screw the rest of the other sellers and overall market. Ditto on the buyers side.
I'm not necessarily agreeing/disagreeing with your post, just pointing out that even when there are quite a few sellers/buyers the market can still get screwed and this isn't just paper theory, have happened and will continue to happen - even with regulations, if folks think they can get away with it they will still do it. Of course you probably get less of this kind of behavior with regulation than without.
(Score: 1) by Arik on Wednesday October 03 2018, @03:52AM
They have to be buying and selling of their own will, they have to be free to simply leave without making a deal if they want to, but the logic still works. As long as there is no coërcion and accurate information, there are only two possible outcomes - both go home with what they had, for no loss, or they agree to a trade which is mutually beneficial.
Of course if party A desperately needs what party B has and there's no other way to get it, he may be willing to pay quite a lot to get it, but that in and of itself doesn't make the market coërcive or unfree, and it doesn't mean that the transactions reached are not STILL mutually beneficial. Given lack of coërcion and accurate information, it's axiomatic - the trade will not take place unless it's beneficial to BOTH parties.
Of course larger markets with more participants have advantages in efficiency and so on, but that's neither required nor sufficient.
And with more players there does appear more opportunity for mischief of many kinds as well. In a way, it's almost the opposite to your hypothesis that many buyers and many sellers are required - the more people are involved, the greater the chance someone manages to lobby for regulation impeding entry etc.
If laughter is the best medicine, who are the best doctors?