October 20, 2018

Clinton's Digital Policy

This is the second in our promised series summing up where the 2008 presidential candidates stand on digital technology issues. (See our first post, about Obama). This time,we’ll take a look at Hillary Clinton

Hillary has a platform plank on innovation. Much of it will be welcome news to the research community: She wants to up funding for basic research, and increase the number and size of NSF fellowships for graduate students in the sciences. Beyond urging more spending (which is, arguably, all too easy at this point in the process) she indicates her priorities by urging two shifts in how science funds are allocated. First, relative to their current slice of the federal research funding pie, she wants a disproportionate amount of the increase in funding to go the physical sciences and engineering. Second, she wants to “require that federal research agencies set aside at least 8% of their research budgets for discretionary funding of high-risk research.” Where the 8% figure comes from, and which research would count as “high risk,” I don’t know. Readers, can you help?

As far as specifically digital policy questions, she highlights just one: broadband. She supports “tax incentives to encourage broadband deployment in underserved areas,” as well as providing “financial support” for state, local, and municipal broadband initiatives. Government mandates designed to help the communications infrastructure of rural America keep pace with the rest of the country are an old theme, familiar in the telephone context as universal service requirements. That program taxes the telecommunications industry’s commercial activity, and uses the proceeds to fund deployment in areas where profit-seeking actors haven’t seen fit to expand. It’s politically popular in part because it serves the interests of less-populous states, which enjoy disproportionate importance in presidential politics.

On the larger question of subsidizing broadband deployment everywhere, the Clinton position outlined above strikes me, at its admittedly high level of vagueness, as being roughly on target. I’m politically rooted in the laissez-faire, free-market right, which tends to place a heavy burden of justification on government interventions in markets. In its strongest and most brittle form, the free-market creed can verge on naturalistic fallacy: For any proposed government program, the objection can be raised, “if that were really such a good idea, a private enterprise would be doing it already, and turning a profit.” It’s an argument that applies against government interventions as such, and that has often been used to oppose broadband subsidies. Broadband is attractive and valuable, and people like to buy it, the reasoning goes–so there’s no need to bother with tax-and-spend supports.

The more nuanced truth, acknowledged by thoughtful participants all across the debate, is that subsidies can be justified if but only if the market is failing in some way. In this case, the failure would be a positive externality: adding one more customer to the broadband Internet conveys benefits to so many different parties that network operators can’t possibly hope to collect payment from all of them.

The act of plugging someone in creates a new customer for online merchants, a present and future candidate for employment by a wide range of far-flung employers, a better-informed and more critical citizen, and a happier, better-entertained individual. To the extent that each of these benefits is enjoyed by the customer, they will come across as willingness to pay a higher price for broadband service. But to the extent that other parties derive these benefits, the added value that would be created by the broadband sale will not express itself as a heightened willingness to pay, on the part of the customer. If there were no friction at all, and perfect foreknowledge of consumer behavior, it’s a good bet that Amazon, for example, would be willing to chip in on individual broadband subscriptions of those who might not otherwise get connected but who, if they do connect, will become profitable Amazon customers. As things are, the cost of figuring out which third parties will benefit from which additional broadband connection is prohibitive; it may not even be possible to find this information ahead of time at any price because human behavior is too hard to predict.

That means there’s some amount of added benefit from broadband that is not captured on the private market – the price charged to broadband customers is higher than would be economically optimal. Policymakers, by intervening to put downward pressure on the price of broadband, could lead us into a world where the myriad potential benefits of digital technology come at us stronger and sooner than they otherwise might. Of course, they might also make a mess of things in any of a number of ways. But at least in principle, a broadband subsidy could and should be done well.

One other note on Hillary: Appearing on Meet the Press yesterday (transcript here), she weighed in on Internet-enabled transparency. It came up tangentially, when Tim Russert asked her to promise she wouldn’t repeat her husband’s surprise decision to pardon political allies over the objection of the Justice Department. The pardon process, Hillary maintained, should be made more transparent–and, she went on to say:

I want to have a much more transparent government, and I think we now have the tools to make that happen. You know, I said the other night at an event in New Hampshire, I want to have as much information about the way our government operates on the Internet so the people who pay for it, the taxpayers of America, can see that. I want to be sure that, you know, we actually have like agency blogs. I want people in all the government agencies to be communicating with people, you know, because for me, we’re now in an era–which didn’t exist before–where you can have instant access to information, and I want to see my government be more transparent.

This seems strongly redolent of the transparency thrust in Obama’s platform. If nothing else, it suggests that his focus on the issue may be helping pull the field into more explicit, more concrete support for the Internet as a tool of government transparency. Assuming that either Obama or Clinton becomes the nominee, November will offer at least one major-party presidential candidate who is on record supporting specific new uses of the Internet as a transparency tool.

Comments

  1. Microsoft PR rep Mark Penn and former USPTO head Bruce Lehman are both involved with the Hillary Clinton campaign. Would Clinton’s support for “innovation” take the form of corporate welfare for incumbent IT, media, and telecom firms, and attacks on small companies and the “netroots”?

  2. A little googling suggests that the 8% and reference to “high-risk” research might be a reference to the NAS “Rising Above the Gathering Storm” report and to legislation that implements its recommendations. Sen. Clinton is a co-sponsor of at least some of these bills.

  3. David Carroll says:

    Hillary Clinton was one of the co-sponsors of the “Induce Act/ICAA” back in 2004:

    http://thomas.loc.gov/cgi-bin/query/z?c108:S.2560:
    http://thomas.loc.gov/cgi-bin/bdquery/z?d108:SN02560:@@@P

    This makes me a bit nervous that her approach to tech legislation may be focused more on preserving profits for existing incumbents and business models rather than encouraging innovation. Basically the Induce Act would have required that any technology that might be conceivably be used to infringe any of the various copyright rights must build in some sort of rights enforcement / use restriction technology. The plain language of the bill seemed to extend the enforcement requirement into tools for creation of derivative works as well as creation of pure copies, meaning that just about any digital authoring tool had an affirmative requiremt to build in DRM. So, no more 100% open source, no more fair use.

    Ernest Miller’s archives on the subject are interesting reading:

    http://importance.corante.com/archives/induce_act/

    While the bill as submitted was a mess, even when cleaned up the effect would probably have been to reverse the Betamax decision.

  4. Are we sure we want government agencies blogging? I’d rather have them doing their work instead of figuring out how to master interactive spin.

  5. When Hillary Clinton headed her health care task force in the Bill Clinton administration, the public was invited. She had lobbyists drafting crucial new laws, but all we saw was the end report. She does NOT have a track record in favor of transparency in government.

  6. David,

    I am having trouble getting into your posts here on f-t-t. You are covering important topics, but I think you are missing something. This post is particular just comes across as “a bunch of stuff.”

    In contrast, Ed’s posts each try to cover one idea only. He tries hard and almost always succeeds at choosing a unique angle for his idea, and then elaborates it to a fair degree.

    I am not an expert on these topics, but here’s one possible angle that I see: “Clinton’s media policy is shaped by corporate media interests whereas Obama is trying to figure out the public interest.” If I am correct about that general theme, then there should be lots of ways that an expert like you could marshall the evidence to make that case. And it would result in an interesting, coherent post.

    Good luck – we could all use some clarity on where the candidates stand on these important issues.

    – Mike

  7. David Robinson says:

    Mike: Thanks for your comment. I had been following the per-candidate structure out of a loyalty to my original plan, but hadn’t been enjoying it. I take your point to heart — it would be better to focus on one idea at a time. I will begin to take that approach with my next post, citing your comment as a motivator.

  8. I lived 12 years in the US and then moved back to Russia where I was born (in the USSR). DRM and overall copyright and patent law use/abuse was the major reason. So I will not talk much more on that – information wants, is and will be free.

    But speaking of broadband – I live in Moscow and I have 6 broadband cables coming to my apartment – they are just plain old ethernet cat5 cables capable of 100 Mbit/sec. If I accepted every “free installation” offer (note the word – free), I could have 12 cables AND also DSL modem over regular phone line as #13. Which at 128 Kbit/sec and $5 monthly fee I’m still considering.

    The actual speed I’m getting to the big Internet depends on monthly fee, but for $45 it can be 12 Mbit/sec, whereas I’m using $25 plan that gives 3 Mbit/sec unlimited. Other variations are possible, like 20 Mibt/sec for $40 with a limit of 25Gb.

    Why I have never seen more then 2-3 broadbandish (not 100Mbit cable for sure) providers in the US? The answer is simple – it’s called “rule of law”, and the particular law which is VERY BAD for broadband is called “fight of way”.

    What would it take myself to establish a broadband startup? I need to order a microway dish for 100 Mbit line of sight access to a local upstream Intenet provider ($200/month) and then I can start installing my own wires (with the rest of 12 wires). Fortunately, no thug has yet figured out in Russia that restricting this fundamental right – to put a wire to your neighbor can be so very profitable. And now – with enough financial strength in the huge number of boradband Internet access companies – that have for the most part no affiliation with telecommunication companies – only 2 of these wires belong to companies that do anything other then Internet access.

    And for extra $5/month I’m having REAL IP address (i.e. I can run a server)? And some providers support multicasing for UDP/video traffic (inside their WAN).

    So – yes – broadband is lagging behind in the US not because of lack of laws and enforcement of those, but due to way too many laws in the telecommunication area. If you want certain innovation business to develop rapidly the first thing to check is to make sure that small startups can operate there with small initial financial requirements.