Ajit Pai is drunk on free market economics. There’s no other way to explain his decision as chairman of the Federal Communications Commission’s to tear up the nation’s net neutrality rules for no good reason.
Knowing this won’t change the outcome of yesterday’s FCC vote, which lets Internet providers give special treatment to some websites over others. But it’s still helpful to know why Pai did what he did.
Contrary to the view of some critics, Pai is not corrupt. Yes, he was a lawyer for Verizon, a fierce opponent of net neutrality, but his decision to scrap the rules was not motivated by a desire to win favor with his former bosses in the telecom industry.
Instead, the problem is that Pai is a zealot. Pai’s speeches and tweets, described below, reveal how he’s in thrall to an ideology that places economic principles over people. In this way, he’s a bit like Latin American socialists who cling to theories no matter the real world harm they wreck.
In Pai’s case, though, the source of indoctrination is not Marxism, but the University of Chicago, which is the standard bearer for law and economics. This school of thought, made famous by scholars like Richard Posner and Milton Friedman, holds that law should be responsible for promoting efficient economic outcomes.
In the Chicago school, society is best served if people are allowed to freely contract in the market, which in turn helps to guarantee prosperity and freedom. Conversely, the law and economics movement (yes, it’s a political platform as much as an academic one) takes a decidedly dim view of government and regulation, treating those things as sand in the gears of the market.
Pai studied law at the University of Chicago, and it’s apparent he imbibed heavily from the ideas around him. This is reflected in part by his Twitter feed, which includes messages like this one, which he retweeted last week:
economics > all other social sciences
— Ben Sasse (@BenSasse) December 8, 2017
His zealousness for Chicago-style ideals is also apparent in his public speeches, including one he made this spring at the conservative Hudson Institute. In the address, Pai gushed about his hometown Kansas City Royals’ use of money-ball tactics to win the World Series, and also explained his vision to bring economic analysis to every facet of the FCC’s operations.
More conspicuously, Pai has made repeated avowals to take a “weed-wacker” to regulation as the FCC’s chair. The metaphor speaks for itself—regulations (including those enshrining net neutrality) are intrinsically harmful and should be chopped down.
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There’s nothing wrong, of course, with drawing on the ideas of law-and-economics. The school has had an enormous influence on the U.S. Treasury and the judiciary, and its advocates are correct that misguided regulation can choke the economy and diminish the prosperity of everyone.
In Pai’s case, however, he’s embraced the Chicago school not as a source of policy ideas as but an ideology in its own right. Gripped by the fever of a true believer, he evinces a hostility to all regulations—not just the bad ones. What else explains his impulse to gut neutrality in the absence of credible evidence that the rules, imposed in 2015, have stunted investment? And what besides zealotry would lead him to tear up a policy that is widely popular with the American public who, understandably, are wary of increasing the power of companies like Comcast?
This is not even the worst of it. Instead, what makes Pai’s pig-headedness so intolerable is that he appears to overlook an important element of the free market theory he so adores. Namely, as any economist will tell you, free market theory is predicated on the idea the market is subject to competition—something that is plainly not the case in the market for Internet services.
I’d be okay with Pai’s vision of an unregulated Internet provided I could choose among broadband services the same way I can pick where I buy shoes or lollipops. In this scenario, broadband providers would have an incentive not to mistreat their customers—through throttling websites or sudden price hikes—because those customers would choose a competitor in the market.
But broadband doesn’t work that way. It’s not like shoes or lollipops, which are sold by hundreds of vendors in any given city. Instead, there is often a single monopoly provider that is much akin to the water company or the electric company. In the same way governments don’t allow the electric company to dictate what appliances we buy, Internet companies should not be allowed to favor one website over another.
But Pai’s fixation with his “weed-whackers” means he’s incapable of distinguishing between good regulations and bad ones, or recognizing that the free market that so informs his thinking doesn’t even exist when it comes to Internet services.
As I said, Pai is drunk on market ideology, and the rest of the country is about to suffer the consequences of his bender.
