I Co-Author Paper On Why “Free Market” BS Work So Well In Policy

I found this item on Techdirt interesting. The article links to several techno-libertarians finding themselves in the uncomfortable position of evaluating the reality that (a) countries such as South Korea, Japan, Estonia, France (and more!) are now zooming ahead of us in just about every measure in broadband deployment and adoption; (b) these countries rocketed past us after they adopted intrusive regulatory regimes and market-warping government incentives; and, (c) our supposedly superior, libertarian, deregulatory approach has not produced the competitive and productive nirvana the theoretical literature promised.

So why do “free market” arguments keep working, so much so that just about every piece of state or federal telecom reform legislation introduced right now assumes that competition happens as a result of deregulation? Why, despite all evidence to the contrary, do Democrats and Republicans alike still rush to deregulate with the religious zeal usually associated with someone who just spotted a burning bush in their back yard? As the Techdirt piece shows, this can’t be explained by the usual cynical response that Congress and the FCC are wholly owned subsidiaries of the Bells or cable cos.

So my buddy Greg Rose and I have written a paper explaining why the same arguments keep working time and again for the 34th Telecommunications Policy Research Conference (you can see a rough draft here). As an aside (in the final version, not yet posted), I explain why Lakoff and his buddies should perhaps spend a little less time on the linguistics of framing and a little more time worrying about the structure of media. To paraphrase McCluen, “whoever owns the media frames the message.” In a world where the mass media can trigger riots by showing a picture of the Pope and pulling a single line out of an academic speech delivered to an academic audience, it’s optomistic to the point of delusional to believe you can frame a message just by picking the right words.

Basic summary below . . .

I’ve played in DC policy-land in a serious way for about ten years now, long enough to notice an oddity. You see the same kind of arguments and power words used over and over again in telecom reform. Critically, the end-all-be-all is “level playing field.” This includes a concept that government shouldn’t “pick winners” and should ensure that the regulatory regime is “technologically neutral.” Supposedly, a “level playing field” creates a competitive market that eliminates the need for bad, bad government policing and regulation.

What is amazing about “level playing field” is it’s flexibility. Incumbents can use it to argue against regulation that limits their ability to abuse market power, while using the same argument to impose crippling costs on new entrants, all in the name of fairness and “level playing field.”

To take a recent example. The cable companies argue that they should have the right to interfere with internet content and that the government should not “pick winners” by requiring them to operate under “network neutrality” rules. They argue that they should have the right to prioritize their voice over IP (VOIP) traffic over those of “parasitic” VOIP providers like Vonage or Skype. At the same time, they argue that they should get mandatory carriage of cable VOIP packets on telco networks. Again, the “level playing field” argument is invoked because this government regulation will “level the playing field” for “facilities based” telephone competition.

How can cable companies make such obviously contradictory arguments, and why do they succeed? The easy cynical answer is that decision makers are corrupt tools of industry that simply follow the commands of their corporate masters. While I agree there is some of that, the effectiveness of these arguments over and over cries out for additional explanation. I see too many staffers at the FCC and on the Hill who get genuinely confused by these arguments — even folks I know are on our side. Sympathetic decision makers may sense these “level playing field” arguments are self-serving nonesense, but have difficulty articulating in a reasoned fashion why the arguments are nonesense. After all, they have a surface appeal, and everyone agrees government shouldn’t “pick winners” and should operate fairly and should generally not get in the way of “the market” or “private industry.” So what gives? Why does this BS always seem so persuasive.

Enter Italian Marxist Economist Antonio Gramsci and his work on hegemony. Briefly, Gramsci proposed that an incumbent class cannot maintain power by force alone. Rather, by controlling use of words and ideas, it becomes possible to foreclose certain ways of thinking and acting. This, in turn, prevents those opposed to the interests of the incumbents from organizing effectively or generating resistance that proves disruptive to the underlying basis of incumbent economic or political power. You end up focusing people on details and changes at the margin, that do little to change things fundamentally.

The “level playing field” and its various sub-arguments are effective becuase they help to constrain the debate within a particular framework. The “level playing field” both resonates with and reenforces the current ideas about the roll of government in public policy. Government involvement in “the market” is inherently bad, and is only tolerable as a means of protecting property rights and protecting national security. Even supposedly pro-regulatory “liberals” only see a roll for government when “the market” clearly fails. The idea that regulation should promote public policy and serves to promote competition is rejected as an oxymoron, or as a limited transition state from a regulated market to a deregulated (and therefore presumed competitive) market.

Level playing field arguments also work because they focus policy makers on details of process rather than results. If you get wound up in making the process “fair”, which is defined by incumbents as treating everyone “the same,” you lose track of the reality that getting competitive entry in an industry with entrenched incumbents will take a lot of work. We saw this with the competing telco and cable overbuilders in the late 1990s. New entrants try to enter the market, and run into all kinds of barriers created by the incumbents and by economic realities. When competition fails, the incumbents can then claim that “the market”, in its supposed perfect wisdom, has declared the incumbents the “winners”.

To indulge in analogy, new entrants become chum for the sharks rather than competitors threatening the incumbents, because the “level playing field” has stacked the deck against them. But policy makers watching from the distant shore mistake the hyper-activity of the feeding frenzy for real competition.

The level playing field also works becuase it obsccures complex economic realities with the economic cliches with which policy makers have become familiar. Most decision makers are generalists with law or public policy backgrounds. Even the expert staff on which they rely usually have general, rather than specialized, education. It becomes easy for industry experts and sympathetic think tanks to invoke the terms and concepts that these decision makers have accepted as the basis for public policy while obscuring economic realities.

Now add the fact that Congressional staff and advisors to Commissioners at the FCC have relatively rapid turnover, so there is no institutional memory of how the same arguments turned out to be total BS last time. Given this lack of institutional memory, the access that industry lobbyists gives them a leg up on shaping the debate. If you’re a new staffer, where do you go to get educated on this stuff? Why look! Competitive Enterpise Institute is throwing a free lunch to release a white paper on the issue your boss just asked you to handle. And it has a panel of respected academics discussing the white paper. Must be a good place to go to get educated on this . . . .

Which brings me to Lakoff and framing. Most people are rediscovering Gramsci’s ideas about hegemony through Lakoffs work on how conservatives control the political debate. That’s good as far as it goes. But it isn’t enough. Because “framing” cannot create genuine change unless it provides a way to get at the underlying assumptions and recognizes the structures that work to push debate in a particular way.

To be more specific, it’s not just a case of the Republicans being so clever at calling the estate tax the “death tax” and being better at figuring out how to develop sound bites that resonate with the public. Yeah, it’s true. But you need to go a step down. Why have some frames become so dominant? How do you control the message when the means of communication and news coverage lie in the hands of a few conglomerates with a common interest in pushing some concepts and belittling others?

Consider the recent flap with the Pope and his purportedly anti-Muslim remarks. Benedict spoke to a small, sophisticated academic audience. They understood the citation to a Byzantine Emperor from the 14th Century and what Benedict intended (and did not intend) with his particular quote. It never occured to Benedict that this one quote might get grabbed and distributed through an information network that individuals with an interest in fomenting resentment toward the west and muzzling dissenting voices by threat of violence. But because parties interested in reenforcing resentment in the Islamic world understand how to work their media structures, they could grab this one reference and put it out there in a manner that served their ends.

So yeah, framing is good and important. And yes, progressives and liberals have fallen down on this front, and it is in their control to fix. But industry BS will continue to be effective unless we start going after the underlying issues. How does the information infrastructure actually work? How do we leverage it to our advantage?

And, perhaps most importantly, how do we prevent “framing” from becoming a trap? If we seek to frame things in a way that works with the underlying assumptions, rather than finding ways to challenge the underlying assumptions, we will always lose in the long run. As Gramsci predicted, the very way in which we accede to the underlying framework of the debate may foreclose us from developing effective policies.

Stay tuned . . . .

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2 Comments

  1. Alan Thiesen says:

    I thought that network neutrality was required to preserve a level playing field for free speech and free enterprise on the internet. Is it possible for you to briefly explain why some level-playing-field arguments are right and some are wrong, and how to tell the difference?

    Will you post a link to the final version of the article? If so, I’ll wait and not read the draft.

  2. Harold says:

    As with all arguments, it’s a question of how you use it.

    It was fashionable to justify entry into Iraq by comparing it to WWII. In WWII, we stood by while a dictator perpetrated evil. That was wrong. How can we not intervene in Iraq?

    The answer is that reality is enormously more complex than can be summarized in a few simple sentences. The differences between the reality in 1939 and the reality in 2003 can fill volumes, as can arguments about the moral similarity.

    If you have only a very surface awareness of history, justification by analogizing our failure to act swiftly to contain Hitler and prevent the evil of the Holocaust appears very simlar to the regime in Iraq where an evil dictator had likewise attacked his neighbors and engaged in genocide against particular ethnic groups. But, as we have discovered, it is dangerous to make policy on the basis of a surface analogy.

    “Level playing field” arguments may be right or wrong based on the realities of the case. But the slogan “level playing field” and the basic concepts of equity it evokes should not be the end of the analysis. We all have a duty to dig in and investigate. Policy makers in particular, therefore, should be wary when parties with clear economic interests come in making arguments about general social equity.

    The other issue is pure econ. If you want to create competition so you can avoid regulation, then you need to ensure a competitive environment exists. But competition doesn’t just happen. It needs an inherently <b>un</b>level playing field to create sustainable competition against an entrenched incumbent.

    That’s why we don’t have competing phone companies anymore. The entrenched local encumbants were able to block entry from even the largest, most dominant long-distance carriers. The “level playing field” allowed the telco incumbents to foil entry into local markets. As a result, we have no competition and no regulatory restraint on the telcos from abusing their power.

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