The Mullings Plan for Global Economic Recovery
September 9, 2001 8:56 PM Subscribe
I'm sorry but "broadband" is not anywhere close to an essential service like the highways were...
posted by owillis at 10:01 PM on September 9, 2001
Of course, this "plan" is pretty damn skimpy on any details, figures, or anything that suggests it's more than pie-in-the-sky, I'm-sure-this-all-adds-up thinking. That being the kind of thinking that seems to make sense but doesn't really, such as "I'll drill a second hole in the boat so that the water leaks out as fast as it leaks in from the first hole!" or "Well, sure I lost some income when I lost my job as a CEO, but I got a new job as a barista- I've lost a job, I've gained a job, so clearly I'm doing exactly the same as before!". Of course, those examples are so bleedingly obvious no one makes that mistake- but when dealing with complex economic issues that can't be easily visualized or understood, people often use that kind of logic- such as "any revenue we lose in tax cuts will surely be made up by new tax revenues from growth in the economy due to new investments from those tax cuts!" (as I said, examples abound from all parts of the political spectrum, left & right and parts between). It always sounds good, but sometimes it doesn't always add up that way...
Uh, all that said I actually agree with Galen that public works projects are beneficial to kickstarting an economy- for example, Al Gore did have a big hand in giving us that tech economy in the first place by sponsoring some key legislation back in the late 70's/ early 80's to keep funding the research institutions that developed the foundation of the Internet as we know it. No joke...
Did Al Gore Invent The Internet? [Also, Letters for this column]
Open Letter from Robert Kahn and Vint Cerf
Sorry... couldn't resist. :)
posted by hincandenza at 10:47 PM on September 9, 2001
The problem is that this would indeed be a monumental, multibillion dollar undertaking, which would take YEARS to complete and thus would have not a snowball's chance of getting us out of this current slump, which will probably blow over sometime in 1Q 2002 anyway.
And we haven't even begun to think about the political mess such a plan would inspire. Many in Congress would not want to blow untold billions on something, and then have all the profits go to private companies that made no investment in the project at all.
posted by aaron at 11:02 PM on September 9, 2001
Um, I don't want to sound cynical, but isn't that Congress' modus operandi? Hence the phrase "corporate welfare"...
I agree that a last mile solution will have major economic benefits, but you're right that as public-works-projects-to-stimulate-the-economy-now I don't think it would work.
posted by hincandenza at 11:35 PM on September 9, 2001
We're no longer in the midst of the outrageous excess that characterized the late 90's, but as "slumps" go this is a remarkably gentle one.
Then again, I'm in the middle of reading "Cadillac Desert", and my head is full of the astounding details of waste, ineptitude, hubris, and bullshit that characterized the massive dam-building public works projects in the 1950's American West. The idea of reattempting that approach with the software and telecommunications industry strikes me as a remarkably expensive way to accomplish limited short-term economic growth.
-Mars
posted by Mars Saxman at 1:10 AM on September 10, 2001
(Don’t tell the World Bank though, they’re forcing Argentina into a strict balanced budget, which includes raiding worker pensions, and payments toward $130 billion in debt. The way the debt is structured is really interesting, but that’s another topic.)
There really isn’t anything in this “Plan” describing why telecom deserves a multi-billion dollar corporate welfare package.
Mullings says telecom and high-tech are responsible for the downturn, then asks for the government to bail them out. This is pretty common rhetoric from market fundamentalists. As soon as a rough economic waters swell, businesses lobby for public money, on top of begging for tax breaks, shirking environmental regulations and fighting worker rights.
Isn’t one of the key fundamentals of the business world that failure happens? That there are no guarentees to success? In America, failure doesn’t happen for companies that can afford lobbyists. Rescue packages do.
I’m not sure what else American businesses (specifically, the Fortune 500) need. They’re protected from labor, from international competition (like Reagan’s tarriffs protecting car manufacturers), they get free research (e.g. Internet) and whenever they sufficiently screw themselves, they get public money. Of course the US businesses have the largest profit margin in the world — they’re doomed to succeed.
It was a government-wide panic over double-digit unemployment which led to the enormous deficit spending of the 1980's. Not the tax cut.
No, it was both. Either could have caused the budget deficit, but arguing that one didn’t aggravate the other is pure ideology.
Bush II is doing the same thing. His tax cut wiped out most of the budget surplus, and now that the economy is slowing, he’s either going to have to deficit spend or use Social Security funds. He’ll call it a “stimulus package” that will “help working families”. This means corporations will be bailed out with public money after ten years of asset inflation. Gore would probably be doing the same thing, only with a smaller tax cut.
And I guess urban sprawl is only something that happens in metropolitian areas. I don’t think he understands that issue very well.
posted by raaka at 3:14 AM on September 10, 2001
As a little background, it is widely held by Mulling's readers that the FCC stifled the roll-out of broadband with it's mismanagement of local vs national telco issues.
[I'm sorry but "broadband" is not anywhere close to an essential service like the highways were...]
Empowering your citizens with access to a world worth of information at their fingertips might make as much of an improvement as the interstate system to my way of thinking.
posted by revbrian at 3:23 AM on September 10, 2001
direct involvement by the federal government probably isn't a a good idea, but i'd be all for the buildout by municipal government, which is already happening in a lot of areas. for the most part municipal broadband networks deliver cheaper and better service to their constituents and have been a spur to telcos operating in the area to quit dragging their feet.
given the initial expense it's not hard to see why the roll-out has been slow. there was that cringley article a way back, and more generally most companies don't like the internet because it benefits "consumers" more than it does business. that's why i think it's great to see municipalities going ahead in the public interest.
business is of course pissed and is actively lobbying to prevent the build out of municipal broadband networks. federal subsidies to encourage public networks might be a good idea, but it's doubtful given the overwhelming business presence in the major parties of washington.
posted by kliuless at 6:47 AM on September 10, 2001
posted by clavdivs at 10:41 AM on September 10, 2001
The FCC? All the FCC did was enforce the the ’96 Telecommunications Act. If you want a scapegoat, pick that. It screwed the sector.
This is another piece of legislation that was supposed to increase competition. Instead, it encouraged mergers and Baby Bell oligopolies. And that’s the world we live in now: Verizon (fomerly Bell Atlantic and GTE), SBC (formerly Southwestern Bell and Pacific Bell), Qwest (merged with US West) and Bellsouth (which merged its wireless division with SBC) own 90% of the local service markets.
These few companies are going to do the same thing to broadband pipes that the television oligopoly did with HDTV: stifle competition and block innovation. They’re well on their way. Look at all the broadband competition these four companies had: Viatel and Winstar bankrupt; Northpoint gone; Covad is nearing gone; Rhythms doesn’t stand a chance; Level3 is looking bad.
When us kooky radicals talk about the media monopoly being bad for people and for business, pick up your ears.
posted by raaka at 2:18 PM on September 10, 2001
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1. DOMESTIC: Because this downturn was led by a collapse in the high-tech and telecommunications sectors, the Federal Government should immediately begin a large-scale plan to provide capital funds for completing the high-tech infrastructure.
Just as the government paid for the interstate highway system in the 50s, 60s, and 70s which connected major cities with small and medium-sized towns nationwide, it should now pay to provide very high speed access from the major markets to those which are small and medium-sized.
This will have the joint effect of re-vitalizing the fiber-optic companies, construction companies, switching companies, and software providers – as well as guaranteeing high-speed internet access to the smallest communities which will have the effect of allowing technically-oriented companies to flourish in smaller communities thus taking the pressure off urban sprawl.
Many of the workers involved in the process may find they LIKE these small and medium sized towns, will settle there, and provide a core of skilled high-tech workers.
2. OVERSEAS: The focus of U.S. foreign aid should be sharply limited to three areas: Food and food production; medicine and medical supplies; and high tech infrastructure.
Most of American foreign aid is not hard cash; it is US products and services. In the high-tech area we can help underdeveloped nations leap frog into the 21st century by providing the same types of infra-structure services in which we will be investing domestically. Most third-world countries do not need – indeed can’t use – the latest, highest-tech switches, computers, and software. This will allow US corporations to utilize warehouses full of last-generation equipment for a very good purpose, and further help the high-speed access, computer manufacturing, and telecommunications companies put people back to work.
As underdeveloped nations become, in effect, web enabled, the level of education of their populations will improve, the level of their economies will improve, and their desire for a much wider range of American goods and services will improve.
posted by revbrian at 8:57 PM on September 9, 2001