An age old problem in human society is the free loader problem. Economists prefer to phrase it as the “Free Rider Problem” so as not to drag in those icky moral and cultural issues. I prefer to use the more appropriate phrase, “free loader” as that’s the real problem. People unable to provide for themselves are not a problem, even for poor human societies. Every society, not matter how rich, is plagued by a slice of humanity that chooses to live off the labor of others, even when alternatives are available to them.
The better term may be the “entitlement problem” but that one has been claimed for other purposes. An example I like to use is the pizza problem. In my youth a friend had a roommate, who was from a very wealthy family. Having grown up unaware of the restraints the rest of us faced, he had a sense of entitlement. He just expected people to wait on him. Whenever we ordered a pizza, this guy would eat more than his share and never chip in for the bill, unless asked. He seemed oblivious to the fact that food cost money and the rest of us had to concern ourselves with the fact we lacked an abundant supply of money.
That’s one side of the entitlement coin. Spend any time around the very rich and you bump into this. When I worked for a Congressman in my youth, he and his family were often stymied by mundane things like buying gas. They never carried cash and did not have credit cards. Someone else was always there to pay the bill so when caught needing to actually pay for something, they would be stumped. The thing about it is there was always someone there to solve the problem for them. A sense of entitlement can carry you a long way in society.
The other side of the coin is the underclass.It is generally assumed by the ruling class that the lower class is just too dumb to do anything other than be poor. That’s often the case. There are a lot of very stupid people in the ghetto. But, they are not so stupid that they cannot provide for themselves. Instead of investing their time into middle-class pursuits, they work the welfare system, learning all the ways to maximize their return, while minimizing their investment. After all, they are entitled.
That’s the thing you see with the under-class. They view themselves as dependent and they can’t imagine things arranged any other way. Government and the rich people who run it owe them free housing, free food, free booze and so forth. In a weird way the under-class is like modern hunter-gatherers. They forage around their environment, in this case the ghetto and the custodial state that supports it, for the necessities to live. Every once in a while, the males engage in violent conflict with males from other tribes. Afterwards, they get high, eat and screw.
The point of all this is humans have been trying to figure out how best to handle the free rider problem since forever and we still struggle with it. The best way we have discovered is to have everyone pay their own way. A radical idea that has been tried in a few places with surprising success. Colonial New England is probably our best example locally. People were expected to pay their own way, take care of their families and not be a burden on their neighbors. Charity existed, but it existed with lots of strings. Those strings were intended to discourage you from needing charity. I used to live near an old almshouse from the 18th century, for example.
All that was considered crazy so we have struggled to come up with better answers. A good example how the struggle is going is Net neutrality. For reasons he most certainly does not understand, President Obama is pushing for the FCC to arbitrarily force ISP’s to treat all traffic the same.
President Obama urged the US government to adopt tighter regulations on broadband service in an effort to preserve “a free and open Internet.”
In a statement released Monday, Obama called on the Federal Communications Commission to enforce the principle of treating all Internet traffic the same way, known in shorthand as Net neutrality. That means treating broadband services like utilities, the president said, so that Internet service providers would be unable “to restrict the best access or to pick winners and losers in the online marketplace for services and ideas.”
Obama wades into a contentious debate that has raged over how to treat Internet traffic, which has only heated up as the FCC works to prepare an official guideline. Those rules were expected to be made available later this year, though reports now claim they may be delayed until early 2015. The debate has centered on whether broadband should be placed under Title II regulation under the Telecommunications Act, which already tightly controls phone services.
Proponents argue that Title II regulation would ensure the free and fair flow of traffic across the Internet. Opponents, however, believe the reorientation would mean onerous rules that would limit investment in the infrastructure and in new services, and that toll roads of sorts would provide better service to companies that can support their higher traffic volumes. But that in turn has created widespread concern that ISPs could throttle service in some instances, intentionally slowing some content streams and speeding others.
The problem is the Internet is not a utility. A utility is a special sort of monopoly that provides a specific product that is the same for all customers. Rich people get the same electricity as poor people. The utility charges by the unit at the same rate for all users. The Internet is a wildly varied service that is valuable only because of a millions of other businesses that sells products and services over the Internet. But, there are loads of companies transferring their costs to people who do not use their service, via the miracle of the cable bill. Facebook is the most obvious example.
The problem we have is a variation on the classic Tragedy of the Commons. The public, through their governments, allowed private industry to use public resources to construct the Internet, including the massive cable TV network. In many cases, these companies were paid to build out infrastructure. All of them rely on free access to public roads and sidewalks to maintain their networks, like any other utility. Unlike the electric grid, the Internet is a virtual market place, The ISP charges rent to anyone who sets up shop and charges access to anyone who wants to buy products offered on-line.
Well, sort of.
I pay much more for Internet service that I probably should, given my usage. I don’t watch movies on-line or listen to music on-line very often. The guy down the road has a bunch of kids who each use ten times the bandwidth I use. Their Internet bill is the same as mine. The costs are socialized so he can get cheap movies and I can get expensive e-mails. Much like the cable bill, we have a inverse of the utility model. Instead of metered billing, everyone pays the same, regardless of usage. The ISP’s want to implement what amounts to metered billing, like a utility, except the government is trying to stop them, because they say they are a utility.