Broadband story shows how markets fail in the provision of public goods

May 31, 2011 — Your article about broadband is a very important one. Adam Smith himself said that goods that everybody needs, regardless of their ability to pay, will NEVER be provided adequately by private investment capital. He called these “public goods” back in 1776, and coined the term “market failure for public goods”! That is to say, markets fail in the provision of public goods. They seem to work just fine for provision of goods for which people have adequate money to pay, or rather, an adequate number of people have adequate money to pay, but not for goods that everybody needs! Markets are failing today in NYC and many others for healthy food in food deserts. That market failure leads to diabetes, obesity and early onset cancers in families trapped in those failed markets. Those expenses add up in medical emergency rooms since these families are not adequately insured for preventative or palliative care. So, it’s a train wreck for national and state budgets no tax-exempt “think tank” seems to want to tackle…

I am glad you cite the Electrification Project of the New Deal because that is only the most obvious of the “market failures for public goods” for which private capital would have been more than happy to provide less than was needed, at higher than necessary monopoly prices! Private turnpikes and ferry crossings are an earlier example, as are trolleys and trains. All of these industries required public subsidy if not outright take over because of lack of private interest to provide them. But, even after generations of public subsides and public debt issuance to build for example the Pennsylvania Railroad, which became the center of a national network of local monopolies, the robber barons came up with their ICC to freeze out newer nimbler competitors who wanted in on the local game!

An interesting back story for you to look into, since that is what Remapping Debate is all about, is how well would the conservatives’ 30 year “divide-and-rule” game post-Fairness Doctrines and de-reg of FCC licenses have worked if 100% of the nation had had access to broadband?

Kevin Mattson’s book “Rebels All” outlines this express mission starting with the Southern Agrarian’s manifesto sometime in the 1950s…Rick Shenkman: “How Stupid Are We?” also covers the disparity between Americans’ views of the world compared to other nations where media justice is a constitutional right and democratic practice.

What comes next in [the] game of undoing the New Deal? And, our democratic state? How has their stonewalling the public good of broadband access aided them, despite money in an early Obama stimulus bill to build-out these 100% networks they scoffed at? What kind of US businessman turns down subsidy money? And what is the hidden agenda there?

Have you checked to see what military corporations are represented on the Boards and voting the shares of controlling shareholders of Verizon, Time-Warner, or Comcast? Is there any other telecoms/cable company of consequence I missed now in this post-Judge Green supposedly competitive and dynamic market for telecommunications? Have you compared broadband prices in NYC to Paris lately? How about Hongkong or Dubai?

— Brett Brandt (New York, New York)