One Information Superhighway; E. Banfield

Reich said the agreement was "a testa ment to the tenacity and conviction of Rich ard Trumka and the UMW." Trumka is the president of the UMW. In my judgment, the only conviction that Trumka had was that if he held on long enough, Bill Clinton would come to his rescue. When Reich was asked about the propriety of the adminis tration's actions he lamely asserted that, like the American Airlines case, the coal strike involved "unusual circumstances. " One wonders if there will be any major strikes that will not involve "unusual cir cumstances" which justify pro-union polit ical intervention during the Clinton presi dency. Not since Franklin Roosevelt has the United States had a president so eager to subordinate the rights of employers, con sumers, and union-free labor to the interests of cartelized labor. It won't work. Clinton may be able to slow down the rate of union decline, but he cannot reverse it. In an increasingly competitive world economy, unions will, like all cartels, eventually disintegrate. D One InformationSuperhighway: Take It or LeaveIt?

by Eric-Charles Banfield A key question about the "information superhighway" remains unanswered: Why only one? Americans have been led to expect the information revolution would bring us not one, but possibly hundreds of competing information networks. Now the future of telecommunications and cable will be dominated by a single system created under U.S. government jurisdiction and subject to U.S. government oversight. Until just recently, the evidence sug gested that the free market, without central government direction, would be allowed to establish information networks according to the needs of consumers. Technology, ad vancing rapidly, had been driving costs down at a rate that promised increased Mr. Banfield is owner of Banfield Analytical Services in Westmont, Illinois, specializing in writing, speaking, and analysis of financial, economic, and publicpolicy issues. affordability of multimedia services over time. The sheer economics precluded any possible "need" for government assistance.

The market process, without central direc tion, would develop not one "infrastruc ture" but instead many networks from which consumers could choose. In that free market, if a consumer disliked the level of performance or security offered on one service, he or she would be free to use a different one. Firms that did not satisfy consumers would have to adapt or fold, at their own expense. But now the U.S. government asserts control over this evolution. It has worked out an arrangement with the large cable and telecommunications firms: The government will let these firms merge and will loosen a few other restrictions. In exchange, the firms will develop a single, centralized, fiber-optic cable information superhighway, 430 THE FREEMAN • AUGUST 1994 called the' 'National Information Infrastruc ture" (NIl), according to government stan dards. Presumably, most transmissions would have to use that one central highway.

The government wants to subsidize the building of that highway so that its price will be low enough to attract others from any market-based network that might offer a competing service. Mter using its power to price out market-based networks, the gov ernment would have de facto control over virtually all telecommunications. The gov ernment has also decided that in order to subsidize access to Nil "for everyone," it must levy a tax on all phone, cable, and other information services. Of course, that means "everyone" would have to pay that tax, at least indirectly. One irony of this intrusion is that, in the name of' 'promoting competition," the gov ernment claims it wants to "force compe tition." No one in the industry, it seems, has pointed out that competition cannot be "forced." Competition is only one ele ment of sound markets, and it must evolve spontaneously. The monopolies the govern ment officially wants to avoid are possible precisely because of the government's in volvement. No monopoly could survive the modem telecommunications era without government protection or privilege. Under free markets, without government med dling, competition is guaranteed.

But apparently the big multimedia firms don't want competition. They prefer the easier life of government privilege and pro tection. They want the government to con trol arid structure the market to their advan tage. Cable and telephone firms, citing the large investments needed to begin laying cable, told the government they were reluc tant to begin, unless officialswould carve up the market in advance and let the corporate players know who their limited competitors would be in each region. Then they could proceed with "certainty." The government was all too happy to comply. That means free markets and competition in communi cations and entertainment have been sacri ficed to power-hungry corporations, legis lators, and bureaucrats. The first casualty of that communications monopoly is consumer privacy. As the tele phone, computer, and cable services merge, the Clinton administration is already push ing a bill to allow the Federal Bureau of Investigation, the National Security Coun cil, and other law-enforcement agencies to tap into citizens' voice and data transmis sions over the NIl.

The second casualty, common in busi ness-government arrangements, is the free dom of suppliers to select their customers. The regional phone companies (the seven "Baby Bells") will have to make the NIl available on a "nondiscriminatory" basis. The government wants' 'universal service," meaning advanced telecommunications services "available to all." It also wants the system's developers to put schools, librar ies, and hospitals "on-line" for free. If not, it will "re-regulate" the system. Declaring telecommunications a "necessity," Vice President Al Gore said, "Congress, the executive branch, the FCC, and the states will share responsibility for revising univer sal service [and] will share responsibility for meeting those obligations. . . ." Citizens, including multimedia firms, should resist the idea of a single superhigh way created under government fiat. Indeed, some personal computer makers have al ready expressed "disdain" for the govern ment's single-superhighway idea. Competi tion and choice requires free markets, not rigged games benefiting those corporations with the most political weight. Consumers should not be satisfied with any centralized monopoly, especially in such an important area as communication of information. 0 THEFREEMAN IDEASON UBERTY HoustonSays No to Zoning by James D. Saltzman "zoning goes down for third time" read the morning headline of The Houston Post last November 3. As they had in 1948 and 1962, Houstonians voted once more to remain America's largest city without a zoning ordinance.