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High-Fiber Monopoly Diet

Via Steve Clemons, an admirable USA Today inquiry into how Baby Bells are trying (and succeeding) to crush competition in broadband internet access. If David Brooks actually cared about sustaining long-term US economic growth instead of just pretending to as a smokescreen to advance the elimination of Social Security, this is the kind of thing he'd be worried about. Someone should tell Brooks what the "dependency ratio" actually is. Or that even if we don't change Social Security at all, its cost as a share of GDP will max out at a level far lower than Germany's current rate of public pension outlays. Or that while Europe is aging faster than America, the European model is, in some ways, better-suited to deal with the transition because they have a less costly health care sector. Or that his deployment of the phrase "either way" in paragraph nine indicates that he doesn't understand Edward Prescott's argument at all.

January 4, 2005 | Permalink

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"If David Brooks actually cared about sustaining long-term US economic growth instead of just pretending to as a smokescreen to advance the elimination of Social Security, this is the kind of thing he'd be worried about."

I believe the phrase you've been searching for in your last couple of posts is: crony capitalism

Posted by: Petey | Jan 4, 2005 11:14:33 AM

Having lived in the US for 2 years, I am able to compare the relative efficiency of different industries in the US and Europe.

Some sectors are much more efficient in the US (car dealership for instance) and probably real estate services.

On the other hand, you have sectors in the US that suffer from an obvious lack of competition.

For instance DSL broadband is very competitive in France and you can even have TV through DSL.
By comparison, the service I get from Verizon is inferior to what I was used to have 3 years ago in Paris.

There are large reserves of productivity on both sides of the Atlantic.

Posted by: amusedfrog | Jan 4, 2005 11:23:06 AM

The problem with the Baby Bells is that after 20 years of deregulation they want us to think that they built the telecommunications infrastructure all by themselves and shouldn't have to share it with anyone. The simple fact is that AT&T had a government approved and supported monopoly for almost 100 years to build out the telephone grid. Claiming it is built by the Bells alone and belongs to them is simple theft.

Posted by: Freder Frederson | Jan 4, 2005 11:52:27 AM

"The simple fact is that AT&T had a government approved and supported monopoly for almost 100 years to build out the telephone grid. Claiming it is built by the Bells alone and belongs to them is simple theft."

I'm not a fan of what the Bells are currently doing, but your comment misses the central fact that Ma Bell built the original network, and the Baby Bells received the local network in the AT&T breakup.

In other words, they did build it, and it does belong to them.

Of course, none of that has anything to do with how regulations should currently be structured. The Bells are behaving in an anti-competitive manner that is destructive to the larger economy, and they should be reined in.

Posted by: Petey | Jan 4, 2005 12:13:04 PM

When Tacoma WA decided to install its own digital cable system throughout the city, with goal of becoming "America's most wired city", AT&T and US West went nuts. They spent millions of dollars trying to stop the project. They failed.

And a funny thing happed.

With a choice of two cable companies, AT&T made Tacoma one of its first clients to go digital. They slashed prices. They upgraded internet service.

US West upgraded the entire city of prime DSL and offered incentives for residents to sign up.

And the city cable company, CLICK, is doing just fine as well.

Competition is good.

Posted by: def | Jan 4, 2005 12:15:46 PM

"Competition is good."

Good for consumers. Not good for profits.

Posted by: Petey | Jan 4, 2005 12:28:24 PM

"Or that even if we don't change Social Security at all, its cost as a share of GDP will max out at a level far lower than Germany's current rate of public pension outlays."


An economic model that seems stuck at 10% unemployement in the good times, and a birthrate that means they are on the way to leaving the planet.


"Or that while Europe is aging faster than America, the European model is, in some ways, better-suited to deal with the transition because they have a less costly health care sector..."

The life expectancy among 65 yearolds in the US is the highest in the world. We pay more for a better system, thats not a problem.

Posted by: Abdul Abulbul Amir | Jan 4, 2005 1:38:34 PM

Life expectancy is a statistic I've seen tortured in many different ways.

How exactly did whoever come up with their figures for life expectancy over 65 in the U.S.?

Posted by: absynthe | Jan 4, 2005 1:44:53 PM

In other words, they did build it, and it does belong to them.

No, they didn't build it. The people who paid government approved and regulated telephone rates to a monopoly for 100 years built the system. It belongs to the public because we built it. Twenty years ago we broke up AT&T in the fanciful belief that the telecommunications system no longer needed indirect government support in the form of a government sanctioned and regulated monopoly. Twenty years later the Baby Bells are no longer babies, they are teenagers out to kill all the competetitors that were supposed to be there twenty years ago--including their parent.

The only thing further consolidation of the Baby Bells is the Justice Department, and I doubt that it will be an impediment in the next four years. Sprint PCS merged with Nextel only so it can sell itself to Cingular or Verizon--look for that merger within a year. We will be down to two cellular phone companies (Cingular and Verizon) and two phone companies (Verizon and BellSouth/SBC) by the end of the Bush administration if current trends continue.

Posted by: Freder Frederson | Jan 4, 2005 1:50:36 PM

The life expectancy among 65 yearolds in the US is the highest in the world. We pay more for a better system, thats not a problem.

Of course, that's complete fucking sophistry from our pet comedy moron, because of the higher number of Americans who don't make it to 65. I hope the high chance of an early death for your parents isn't too much of a problem.

On the main point, Freder is correct: the US will soon have the worst of both worlds, in terms of telecoms. A lack of competition, and a lack of technological advancement across common standards.

Posted by: ahem | Jan 4, 2005 4:35:47 PM

Thank you, ahem.

I didn't even think of using the numbers that way, but I'm just not sheer evil enough.

Posted by: absynthe | Jan 4, 2005 4:37:41 PM


>>The life expectancy among 65 yearolds in the US is the highest in the world. We pay more for a better system, thats not a problem.

>"Of course, that's complete fucking sophistry from our pet comedy moron, because of the higher number of Americans who don't make it to 65."

BS. Quality of health care has much more impact on the life expectancy of 65 yearolds than 20 yearolds. Likewise, bar room brawls, gang shootings, bad drugs and the like impact the life expectancy of 20 yearolds more than 65 yearolds. As you so civily note more Americans don't make it to 65 than some other societies. However, if that were due to poor quality healthcare, they would not suddenly start living longer in their years of high healthcare consumption.

Posted by: abdul abulbul amir | Jan 5, 2005 1:05:54 AM

As you so civily note more Americans don't make it to 65 than some other societies. However, if that were due to poor quality healthcare, they would not suddenly start living longer in their years of high healthcare consumption.
It seems to me that all the problems you mention (gang shootings, drugs etc.) are problems that fall mainly on people with low incomes. These also tend to have the most unhealthy lifestyles. If you (excusez le mot) cull the unhealthy ones, you'll end up with a higher life expectancy for the others with an equal (or perhaps even slightly worse) quality of care.

This false argument is also made in reverse: American drug-policy makers like to point at Holland's large number of drug addicts. They forget to mention that this is mainly due to the fact that we keep our addicts alive into old age.

Posted by: jasper emmering | Jan 5, 2005 6:16:36 AM

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