August 31, 2012
by Harold Furchtgott-Roth
Over the past several weeks, the American public has seen a stark contrast between the two major political parties in their views about the role of government in business, particularly small business. In a campaign speech in Roanoke, Virginia, President Obama emphasized the importance of government support for business in a wide range of activities from infrastructure such as roads to Internet research and development. The president said:
"The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together."
But what are mostly remembered from the speech are two poorly juxtaposed phrases: "If you've got a business--you didn't build that." While not his intention, President Obama created a campaign slogan--for Republicans. In subsequent weeks, many small businesses have put up signs saying that they did build their business.
Both political campaigns seek to champion small businesses, but remarkably little political attention has focused on small Internet and wireless businesses. It is the Internet after all that President Obama highlighted as one of the reasons that private businesses could not succeed on their own without prior government research and development.
Our federal government was instrumental in the early research and development for the Internet. In a magnanimous gesture, our government opened the initial Internet to public and commercial use. While conceptually similar, the Internet of today is not the Internet the federal government developed in the 1970s and 1980s. The Internet has evolved and expanded in unforeseeable ways: global, faster, ubiquitous, and more useful than even the most optimistic advocates could have guessed. Given a choice, no one would choose to live in the Internet world of 1990.
Wireless has been one of the unforeseeable developments of the Internet. There was no wireless Internet in the early 1990s. Today, the wireless industry and the Internet industry are inseparable; the growth of one is tied to the other.
While our federal government was instrumental in some of the research that led to the development of the Internet, the federal government did not build it. The Internet was built by countless firms and individuals around the world. It evolves every day not by the grace of government but by the ingenuity of individuals. Telecom companies, wireless companies, equipment manufacturers, software and applications developers, and even billions of individual consumers who move with wireless handsets help expand the Internet daily.
Nor is the Internet "owned" by the government. In the United States, as in most countries, no one individual or entity "own" the Internet. In the United States, the network of networks is owned by hundreds of telecommunications companies with network equipment, thousands of businesses with connected networks, and hundreds of millions of ordinary Americans with a wireless router or a smartphone. Outside of government facilities, little of the Internet in America is "owned" by the government.
In industries such as health care, electricity, and housing, government agencies offer services that substitute for privately-provided services. Such is not the case for the Internet or wireless services. Although some government agencies will provide funds to subsidize those services, the government is not the actual provider.
When it sought to improve broadband service in rural America through the Connect America Fund, the Federal Communications Commission did not seek to expand federal broadband networks. There are no such federal networks. Instead, the FCC seeks to help fund corporate networks.
Few ordinary Americans look to the government to solve their problems with Internet or wireless service. Consumers go to private stores or online to purchase Internet and wireless service and equipment and to have them repaired. Consumers seeking better Internet or wireless service usually call their provider, but only rarely the government. Complaints about wireless service or Internet service are remarkably few at the FCC.
Politicians of all stripes claim to be the champions of small businesses in America. No doubt, some are. But the real champions of small businesses are not politicians but the small businesses themselves. As Adam Smith noted 236 years ago, it is from the self-interest of individuals that much of wealth, including public wealth, is created. Nowhere is that truth more evident than in the Internet and wireless sectors, among the fastest growing segments of our economy. If someone asks who built them, the answer is simple--you did!
Harold Furchtgott-Roth is a Senior Fellow and Director of Hudson Institute's Center for Economics of the Internet.
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