Net Neutrality is not about freedom

This post is addressed to all the proponents of net neutrality on the grounds of the freedom of choice of the consumer. But net neutrality has nothing to do with freedom.

The principle of net neutrality is that internet service providers should treat all content equally so that the consumers choice of content is not influenced by the speed at which that content is available.

Let me rephrase that principle without changing its meaning. Internet service providers should not be allowed to contract with content providers on mutually beneficial terms with regards to the speed at which the content will be made available to consumers.

Rephrased like this, it is clear that the principle is not about protecting the freedom of the consumer but about restricting the freedom of the service or content providers to spend their money as they see fit.

Proponents of net neutrality claim that its violation will make it more difficult for startups to compete with bigger companies because they do not have the money to pay the service providers for preferential treatment. That is true. All of the following is true too.

Startups do not have the money to pay great salaries. So how about pay package neutrality? Companies should not be allowed to pay more to attract employees because higher salaries influence the choices of employees.

Startups do not have the money to buy large offices. So how about office size neutrality? Companies should not be allowed to have more spacious offices because spacious offices influence the choices of employees and even of clients.

Startups do not have the money to purchase expensive routers and server farms. So how about infrastructure neutrality? Companies should not be allowed to have redundant server capacity.

Startups do not have the money to purchase advertisements on television. So how about air-time neutrality? Companies should not be allowed to spend more than a certain amount on advertisements.

Startups do not have the money for expensive quality control. So how about quality neutrality? Companies should not be allowed to spend more that a certain part of their budget on testing.

All of these absurd examples indicate the absurdity of the principle of net neutrality. The internet is nothing more than servers, routers, cables, spectrum rights etc. All of these are privately owned and privately maintained. Decisions on the use of these resources rightfully belong to the owners of these resources. That is what freedom means.

Like all violations of freedom, the principle of net neutrality hurts the profitability and efficiency of the most successful producers. And that hurts all of us.

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Thoughts about technology funding

Over the past three days, I attended a workshop on GPU programming and applications at IIT Bombay by NVIDIA. Here are a few comments by different speakers, that stayed with me. And prompted me to write about a topic I have got tired of writing about.

1) “If the government had not invested in super-computing in the 90s we would not have mobile phones today.”

2) “The prime minister recently announced an outlay of Rs 45,000 crores for developing supercomputers. This is what all of us are excited about”

3) “Gone are the days when hardware was designed to solve important algorithms. Today, we have to adapt our algorithms to suit available hardware.”

The last comment refers to the fact that GPUs were developed to satisfy the enormous demands of the gaming industry. They are now being used for solving scientific problems, and algorithms have to be adapted or designed to utilize the enormous capabilities that GPUs can provide.

It seems plausible that some of the complex problems being researched would remain unsolved if the government did not fund them. But, is it true?

The history of GPUs indicates otherwise. GPUs were funded by the desire of people to entertain themselves. By consumers who have no knowledge whatsoever of the problems researchers are trying to solve, no knowledge of the technical hurdles they face, and perhaps no ability to even comprehend these problems.

10 years back when I was doing a project that required some graphics programming, I was struck by the enormous amount of computing and programming effort involved in producing realistic rendering of scenes. And I wondered about the guys who toiled to build games that had not just realistic rendering but so much more (modelling collisions, deformations, haptic feedback, simulation of human behavior …). I wondered where they got the motivation to toil away just to satisfy some silly gamer who wanted to see blood spurting out of a bullet wound in a realistic manner in some 1st person shooter game. The computational and modelling was challenging and interesting. But to what end? I couldn’t have done that.

The point is that it doesn’t matter. The technology that is useful to model fake blood spurting out of a fake bullet wound is also useful to simulate the impact of waves generated by a storm surge or a tsunami. And the amazing thing about the free market is that the idiot gamer who spends much of his life shooting imagined enemies on the biggest and most expensive devices money can buy, is contributing to the research efforts of all the speakers who presented their work in the last three days. And the idiot gamer is spending his money voluntarily to enrich (or waste?!) his own life. It is not necessary to tax him or the luxury products he buys to fund research projects.

Proponents of government funding often make the argument that it is necessary to invest in activities that are not economically viable in the short term to get returns in the long term. And yet, ask any of the eminent speakers if they would have invested government money in GPU technology 20 years ago. The answer is probably obvious. The fact is that none of us is good at predicting what the future will hold, what direction technology will take, what will work, and what will not. And none of us has the right to take other people’s money for what we think are more worthy projects. I might choose to think of hard core gamers as idiots, but that judgement does not give me the right to take their money and spend it on earthquake modelling. Those of us who are passionate about scientific projects have as little conception of the joy that gamers derive from their games, as the gamer might have of the joy that we derive in formulating and solving differential equations. It is not for us to decide what activities other people should value. And we should stop making the case for robbing other people of their money to meet our goals – even if we do think our goals to be bigger and worthier that those of the people we propose to rob.

And if the moral argument is not sufficient, the history of GPUs should be a humbling reminder. The money we propose to spend on our pet projects could have been spent by others in other ways – on their pet projects. Are we confident that our pet projects will do more for the future of technology (whatever that means), than their pet projects? And if we are not, we should have the good sense to let the decision remain in the hands of the people who earned that money in the first place.

2G and the real scam

Allegedly, the public exchequer has incurred a loss of several tens of thousands of crores of potential income from auctions on the 2G spectrum. And the controversy over this refuses to die down. No one seems to realize that the government does not own spectrum and has no rights to auction it in the first place. Most people seem to believe that the government owns everything by default. So let me play along and see where this logic leads.

To setup a shop (or pretty much anything) in India, one needs to acquire a license (or registration or whatever). As far as I know, these licenses have never been auctioned. Assuming a very modest figure of Rs 1 lac per shop license auctioned, and just half a million shops who could have paid this modest sum, that works out to a loss of 5000 crores.

Over 750,000 two wheelers were sold in India last year. Each of those had to be registered. These registrations could have been limited (with the added benefit of reducing road congestion and pollution) – say to 500,000 – and auctioned to raise revenue. Assuming a modest amount of an extra Rs 10000 per registration, that works out to a loss of 500 crores. Similar losses could be worked out for sales of other vehicles. Let us say the total loss on all vehicles is 2000 crores. Further the government could have made it mandatory to renew vehicle registrations every year (as a security measure). These renewals could also be auctioned (to reduce the incentive to keep using old vehicles, thus reducing pollution). Assuming a very small amount of Rs 1000 on average per vehicle registration and estimating the number of vehicle owners who would pay this amount at 20 million, the total loss works out to another 2000 crores.

The cricket world cup is coming up. The right to use cricket as a theme for advertisements could be restricted and auctioned. Just imagine the loss! Easily another few thousand crores.

Tens of thousands of people migrate into cities from rural areas or smaller cities and towns. Since these people obviously cannot afford to buy houses, they stay on rent (if not in illegal slums). The right to rent space could be auctioned (with the added benefit of reducing overcrowding of the cities). Another few thousand crores lost.

Enough of examples. Let me generalize. Any activity that results in any value to anyone could be restricted by the government and the rights to it could be auctioned, thus generating additional revenues. Assuming just 1% of GDP as the revenue that the government could have generated by auctioning rights to economic activity, that amounts to a loss of 70,000 crores per year. Aren’t auctions wonderful? They have such immense potential to generate revenue. Sadly, this incredible idea is woefully under-used by policy makers. And no one is complaining about this scam!

Enough of sarcasm! Suppose the license rights had been auctioned. Who would have paid the money? The telecom companies who would have had to remain in business by lowering their costs – paying lower salaries to their staff or by hiring less, increasing the prices for their services and by reducing their profits. Ultimately, it is the “common man” – that mythical creature worshipped by all policy makers – who would have paid for the license rights. And where would the money have gone? Ah it would have gone to the same place where government money usually goes – but really, that is rude of me. I should not dare to ask such questions. Of course it would have gone into welfare schemes for the common man – the NREGA (remember the pictures of smiling villagers carrying a couple kgs of mud on their heads?), the minimum support price for various foodgrains (wasn’t there a recent report about grains rotting in government godowns? never mind), the public distribution system (absolutely necessary since minimum support prices cause inflation), the right to be educated (in a school where teachers never turn up, but that’s OK, the children can atleast have fun) etc. These are all noble ideas with proven track records. They must be implemented at all costs. You see, the “common man” is too stupid to know what he should do with his own money. That money should be taken away from him – by means of taxes on all consumption, license fees on every service that he uses etc, etc. A portion of it should be used to subsidize higher education (after all, the bureaucrats and policy makers need to be educated, don’t they?). Another portion should be used to establish various government agencies (like the agency which calculated the loss to the exchequer in the 2G scam). Another portion should be used to fund events such as the Commonwealth Games (it is a matter of national prestige after all). Another portion should be allocated to muncipal agencies and the like (like the one that digs up the road in front of my house every 3 weeks). Another portion should be used to line the pockets of the entire government machinery (people are corrupt and selfish, what to do?). Another portion should be used to create TV and other media advertisements for welfare schemes. And then, whatever is left (if any) may be returned back to the common man who should be grateful and beholden to the government for thinking of his welfare. Where would he be if he were left to the mercies of the free market? Oh no. That is just unimaginable. He would simply be exploited by the capitalists and left without a home, education and health care if he had full control over all his money. Just imagine!

Oh, did I get back to sarcasm after starting the last para with “Enough of sarcasm!”. Sorry about that. The real scam here is much, much larger than a few thousand crores. It has been in operation for decades (centuries?). And it is primarily a moral scam, not a monetary one. It is perpetuated by people who seek to derive their self esteem second hand – not from their personal achievements but from a claim to altruism (however tenuous), not from producing value but from distributing the value they have not produced. People like Raja are not responsible for the scam. People who support the system that makes Raja inevitable are.

Regulations and waste

Here is Raymond Chen describing what the algorithm to select the most frequently used programs list on the Windows Start Menu does not look at:

The precise algorithm that is used for determining which programs go on the MFU over time has been reviewed by government-appointed regulators, who have not raised any concerns over vendor bias.

Just imagine how much time, money and effort is wasted this way.

Justice

In comments on a previous post on discrimination against Muslims in Mumbai, Krishnamurthy asks

…suppose you have a “weak” government, which does not run schools, provide health care, etc.

What’s to prevent the “majority”– “those in power” — from denying education and other resources to the “minority”?

The concern is that a section of people who possess “power” – political and/or economic – engage in irrational discriminatory behavior to the detriment of certain other sections of people. The Indian caste system is a case in point. The issue is whether this concern should be addressed by political measures such as laws against discrimination, affirmative action, reservations etc.

It is clear that political measures against irrational discrimination necessarily infringe on the freedom of the individual to act according to his own judgement and therefore are unjust. On the other hand, the discrimination is also clearly unjust. This is seemingly a moral dilemma. This dilemma must be resolved before one can evaluate the practicality of political measures.

The first step in resolving the dilemma is to distinguish the concept of justice from the concept of fairness.

Fairness (in its most plausible form) is the idea that people are entitled to benefits that are in line with their capabilities – commonly referred to as equality of opportunity. Consider the question: Is it fair that some people are born rich and some are born poor? If it is unfair, who is responsible for it? Next consider the question: Is it fair that some people are tall and some are short? If it is unfair, who is responsible for it? It should now be clear that whether one is born rich or poor, tall or short is a metaphysical fact. It is neither good nor bad, neither right nor wrong, neither fair nor unfair. It simply is. Metaphysical facts are not subject to normative judgement. A person’s genetic makeup, his family, his attributes are part of his identity. Different people will necessarily have different identities. To hold that this is unfair is absurd. The concept of fairness has no basis in reality.

What about justice? What facts of reality is the concept of justice based on?

What fact of reality gave rise to the concept “justice”? The fact that man must draw conclusions about the things, people and events around him, i.e., must judge and evaluate them.


Justice is the recognition of the fact that you cannot fake the character of men as you cannot fake the character of nature, that you must judge all men as conscientiously as you judge inanimate objects, with the same respect for truth, with the same incorruptible vision, by as pure and as rational a process of identification—that every man must be judged for what he is and treated accordingly,…

                  — Ayn Rand

The concept of justice arises from the individual’s need to judge people. Justice pertains to the mental process by which an individual judges others. A mental process cannot be forced. The injustice in discrimination lies in the fact that the person making judgements includes considerations that are not relevant to the judgement. The only way to correct this injustice is to make him realize the error in his judgement. The appropriate tool for this is arguement and persuasion, not coercion. Judgement cannot be forced. When one attempts to correct the injustice in discrimination by coercive measures, one is severing the concept of justice from the facts that give rise to it. The motivation for making good judgements is to be able to act on them. Forcing a man to act against the judgement of his mind is the worst imaginable way of improving his judgement. One cannot achieve justice by destroying the need for it. Man must be left free to act on his own judgement as long as he allows others to do so.

The potential for injustice is inherent in the fact that man is neither infallible nor omniscient. As such his judgements will not always be right. It is not possible to eliminate injustice. One can try to reduce its consequences when it is in one’s own interest to do so. That is what proper charity should be about. This is the resolution to the dilemma. As long as the injustice in question does not involve coercion, such injustice cannot be criminalized. It should be worked around by charity.

Now that the moral questions are resolved, one can address the practicality of political measures against discrimination. As the history of caste based reservations in India shows, these reservations do not work. 50 years after they were instituted, political parties continue to call for increasing their scope. If there could be a plainer indication that they do not work, I don’t see what it might be. What does work is just plain self-interest and appropriate charity. Those who see the injustice of discrimination stand to benefit. They get to work with a larger pool of deserving people. Those who engage in discrimination lose out. The free market at work. It takes its time – changing people’s ideas always does – but it is the only thing that works.

As with any idea, one of the most effective ways of determining its truth is to examine all of its logical implications. If it can be beneficial to abolish discrimination in education and employment decisions, why stop there? Why not go further and abolish discrimination in friendships? Why not abolish discrimination in marriage? Surely these would have a greater effect? Most people would shudder at this suggestion. Yet this is just one of the implications of the same idea. This absurd suggestion only makes plain what is a little more difficult to see when one is merely looking at economic effects. Economic judgement cannot be forced just as personal judgement cannot be forced. There is no such thing as forced justice.

Extract from Discovery of Freedom

Here is a fascinating extract from Rose Wilder Lane’s Discovery of Freedom

The bows of ships had always been bowls. They floated, they rose to the tops of waves; they stayed on the surface of water. They were safe. The Rainbow’s bow curved inward; the prow was as sharp as a knife. It would cut into the water; with wind in the sails it would drive headlong to the bottom of the sea. Sailors looked, and backed away. Sail, on a thing like that? straight to Davy Jones’s locker?
Griffiths did not intend this ship to rise on the waves. Every rise and fall was a loss of speed. He designed the Rainbow to slice straight through the waves and keep going, fast.

Dr Rodger’s testimony against subsidies

I came across this testimony delivered by Dr Rodgers, CEO of Cypress Semiconductor via this essay by Paul Graham. 

Rodgers begins his testimony with

In my right hand I have a data-communications chip made by Cypress Semiconductor. We call it HotLink. It is capable of transporting information over a wire, or through an optical fiber, at the rate of 330 million bits per second. In my left hand I have a 4,196-bit static random-access memory (SRAM) chip made by Cypress. It is capable of storing and retrieving data in three nanoseconds–about the time it takes light to travel one yard. It is the fastest SRAM of its type available from any company in the world. Our HotLink chip would undoubtedly be part of any data communications network created in the United States–and in high volumes. Our super-fast SRAM is currently being used in conventional supercomputers.

Another excerpt:

So please allow me to reintroduce myself: I am an excess of the 1980s. Based on my ownership stake in Cypress, I am one of the people who, in the President’s words, “profited most from the uneven prosperity of the last decade.” I became a paper millionaire in the 1980s–eight times over, in fact.

How did I profit? I started a company in Silicon Valley. I obtained stock in that company when it had one employee (me) and one used computer. I worked with that company for a decade–sixteen hours a day, six days a week–to help get it where it is today.

And where is it? Over its ten-year history, Cypress has generated over $1 billion in cumulative revenue, made over $160 billion in profits on which we paid $60 million in taxes, created 1,500 jobs which paid cumulative salaries of nearly $500 million, on which our employees paid further taxes of $150 million. We have shipped cumulative exports worth $300 million. We have generated a market value of $500 million for our shareholders and employees–all of whom own stock in the company.

Vow! That reads like Henry Rearden’s courtroom “defense” in Atlas Shrugged. It is great to know that there are people like this in the real world. From some of the other public statements by Rodgers (links can be found on the wikipedia page on Rodgers), it is clear that Rodgers has read Rand. This is what great works of art can do.

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