The Myth of Unplanned Economic Development

[sophia-sadek.livejournal.com]

One of the heroes of libertarian ideology is the railroad robber baron entrepreneur James J. Hill. He is contrasted with the other robber barons entrepreneurs who built the intercontinental railroad. The big difference is that Hill did not leverage public financing to construct his empire organization.

Hill derived his wealth from his serfs yeoman farmers who settled on his land to raise abundant harvests for transport to distant markets on Hills road. The settlers were forced encouraged to sell their produce to grain elevator shysters entrepreneurs at rock bottom market prices. These pilfering enterprising middlemen held on to the grain until a more favorable price was offered on the grain market and they obtained rate rebates by shipping in bulk. (They also bilked optimized grain prices from farmers by underrating the quality of the grain.)

When we look at the surface of Hill's story, it appears that no public planning went into this development. The libertarian historian has conveniently avoided looking at the planning that took place years before Hill obtained his fiefdom property. Racist Forward-looking politicians deliberately expropriated acquired the land from its native inhabitants for the purpose of economic development. Hill and his settlers maintained their holdings under the protective hand of federal and state thugs military personnel, lest it fall back into the hands of the original proprietors uncivilized people.

Although the Solyndra investment appears to be a piece of failed public planning, it has more of the earmarks of traditional robber baron private development. Back in the day, a thieving an enterprising operator would run his business into the ground and sell off the depleted stocks to a shifty trusted new partner, leaving the original investors with little or no return on their capital.

Were it not for public planning, this Internet space would not be available for us to use. In fact, I would not have the capacity to communicate as well as I do had it not been for public planning.

Is there really such a thing as unplanned economic development?

Comments

[harry-beast.livejournal.com]

When I think about all the wealth generated by Apple, it makes me wonder which government agency thought it all up and, with plodding bureaucratic meticulousness, taxed and regulated it into what it is today.
Were it not for public planning, this Internet space would not be available for us to use.
While we're at it, which government department runs Livejournal? Or is it run by UN bureaucrats?

Governments can play a role in supporting innovation and economic growth by taking care of their proper responsibilities, e.g. infrastructure, education, national defense. Economic development is something that governments have never done very well.

[kylinrouge.livejournal.com]

By this do you mean government should engage in building infrastructure and then privatizing it? That's how we got the internet.

If we kept our infrastructure providers and service providers separate like they do in other countries like South Korea, then we wouldn't have so many last mile issues with the major telecom providers in the USA.

[harry-beast.livejournal.com]

"How we got the Internet" is a complicated story, in which the government, government agencies, tax money and Al Gore all played a part. I also give a lot of credit to the innovators, visionaries and entrepreneurs without whom the Internet would still be an obscure tool only used by academics, researchers and nerds. Not that the free market side of things was without its downside, as the Dot-Com crash demonstrated.

Anyway, the government still has a role. A country's data networks are a strategic national asset, requiring a national strategy and policies to support them. The government can also step in when social needs are not met by a purely free market approach. An example from Canada is government initiatives to provide broadband access to rural areas.

I think that there is some merit in separating the basic plumbing of the Internet from the other parts, though I can't say that I am familiar with the South Korean model.

[kylinrouge.livejournal.com]

Basically it's like, the infrastructure providers have certain regulations they have to meet if any service providers want to buy some infrastructure. They can't just install some basic garbage internet and sell it to a service provider that wants to expand to that area. The government of South Korea also has made it a nation-wide mandate that every home should have access to broadband internet. Obviously this is much easier to implement in such an urban nation, but the US has the required cash flow to make this happen; it's extremely cheap to lay fiber.

I don't believe (based on the evidence that they haven't yet) that ISPs in this country will expand their infrastructure to provide high-speed internet across the country. I can't even get any FiOS or U-Verse in my area, and I'm right outside of NYC. They have no incentive to do it, since they can just charge more for the same infrastructure every year.

But it sounds like you would support a government project to lay fiber and then sell it to ISPs. If it came with some strings attached (like not charging an arm and a leg for it) I would be fine with that.

Obama's model...

[sophia-sadek.livejournal.com]

... seems to be one where 98% of the population will have to have Internet access in order to do business or obtain services. Only 2% of the population will be able to live without Internet access.

DARPA...

[sophia-sadek.livejournal.com]

... developed the seeds of what became the Internet. You seem to not have gotten the point of the post. There are types of venture developments that are seen as too capital intensive to warrant private investment. When the government kick-starts the process, it opens up space for smaller players to operate. In the case of 19th century economic development, that kick-starting involved taking land from its inhabitants.