Hindery Joins the Chorus
Powerline has a good takedown of Business Week's giving Leo Hindery a platform in which to blame GWB for the tele-communications breakdown in New Orleans. PL justifiably goes after Hindery's phony guise as a clinical analyst from the business world. Leo Hindery is a political guy. He is a guy you hire to run your telecom company because he knows everybody in telecom and in Washington, not because he is a strategic telecom genius. Kind of like hiring Dick Cheney to run your oil services firm.
Anyway, separate from motivations, Hindery is wrong on the merits. Our telecom industry is one of the most over-regulated sectors of the economy and consequently one of the least vibrant. The burdensome regulations cause companies to do the least amount of investing in both infrastructure and human capital that they need to. Sensible people who compare the quality and value they receive from their phone company to the quality and value they receive from nearly any other service provider with whom they do business know this.
There are so many points in time and so many stupid policies that one can point to where we made the wrong decisions regarding our tele-communications industry, but the most recent one is clearly the Telecommunications Act of 1996 that Reed Hundt, Clinton's FCC Chairman, admitted was drawn up to give the economy a shot in the arm. No other piece of legislation from that era so perfectly embodies the keg party approach to the economy that prevailed in the 1990s - live up the intoxicant-fueled good times, sleep off the resultant pain and hope someone else cleans up the house. (The prominent partiers included Bernie Ebbers, Gary Winnick, Joe Nacchio, but less visible revelers were Terry McAuliffe and Leo Hindery. A fair minded right-winger might characterize the prevailing business/politics dynamics thusly: "we got the oil, they got the phones .") The Act gave soon-to-be fly-by-night startups the right to use established companies' infrastructure at cut rate prices, which predictably removed the incentives for the incumbents to invest in upgrading their infrastructure. That is one reason why basic phone service runs on 100+ year old technology. Much like the levees that broke in New Orleans, the state of our telephone system is fragile not because of too little money but because of too little freedom to make sensible choices - too many rules imposed upon the real players by an unknowledgable few.
Anyway, separate from motivations, Hindery is wrong on the merits. Our telecom industry is one of the most over-regulated sectors of the economy and consequently one of the least vibrant. The burdensome regulations cause companies to do the least amount of investing in both infrastructure and human capital that they need to. Sensible people who compare the quality and value they receive from their phone company to the quality and value they receive from nearly any other service provider with whom they do business know this.
There are so many points in time and so many stupid policies that one can point to where we made the wrong decisions regarding our tele-communications industry, but the most recent one is clearly the Telecommunications Act of 1996 that Reed Hundt, Clinton's FCC Chairman, admitted was drawn up to give the economy a shot in the arm. No other piece of legislation from that era so perfectly embodies the keg party approach to the economy that prevailed in the 1990s - live up the intoxicant-fueled good times, sleep off the resultant pain and hope someone else cleans up the house. (The prominent partiers included Bernie Ebbers, Gary Winnick, Joe Nacchio, but less visible revelers were Terry McAuliffe and Leo Hindery. A fair minded right-winger might characterize the prevailing business/politics dynamics thusly: "we got the oil, they got the phones .") The Act gave soon-to-be fly-by-night startups the right to use established companies' infrastructure at cut rate prices, which predictably removed the incentives for the incumbents to invest in upgrading their infrastructure. That is one reason why basic phone service runs on 100+ year old technology. Much like the levees that broke in New Orleans, the state of our telephone system is fragile not because of too little money but because of too little freedom to make sensible choices - too many rules imposed upon the real players by an unknowledgable few.
posted by Donny Baseball at 11:34 AM
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