Does Regulation Kill Private Sector Investment? Is Water Wet? Is Snow Cold?

Seton Motley
|
Posted: Feb 15, 2016 12:32 PM

We free marketeers repeatedly reassert the obvious - that government abusing the private sector hurts the private sector. Pro-government fetishists try mightily to deny Reality - claiming that bigger government doesn’t damage the sectors over which it lords.

We now have the entire nation of India, filled with nearly one billion mostly Internet-less people, as but the latest visual aide. When government rears its ugly head - private investment heads for the hills. Or, in this case, back to the Silicon Valley.

Just one nasty, hydra-headed regulation - Network Neutrality - has caused a raft of huge investors to bail on the subcontinent. Leaving stranded and unconnected hundreds of millions of poor Indians - who pre-government had hope of tapping into the Internet.

Facebook’s Free Internet App Banned by India’s New Net Neutrality Rule: Because the pro-government fetishists don’t like anyone getting anything free -unless it’s from government. So Facebook and their investing cohorts did what always happens when government grows - they understandably shrink away.

Facebook Pulls the Plug on Free Basics in India: “After month long consultations, triggered by the net neutrality debate, Telecom Regulatory Authority of India earlier this week barred operators from charging different rates for data access, dealing a blow to Free Basics and other such plans like Airtel Zero. While Facebook had promoted Free Basics as a programme aimed at providing basic Internet access to people in partnership with telecom operators, critics slammed the service saying it violated the principle of net neutrality.”

So wedded are the fetishists to government regulation, they will sacrifice on its altar billions of dollars of Indian investment - dedicated to connecting (hundreds of) millions of poor, Web-less people.

Facebook Free Basic vs. Net Neutrality: India Chose Net Neutrality: Sadly, pathetically true. Are other nations similarly choosing government and continued poverty over private investment and connection to the future? Thankfully, no: “Launched in 2014, Facebook is running the programme across 17 countries.” It would appear their governments aren’t as absurdly anti-growth as is India’s government. And don’t view billions of outside dollars pouring in as a bad thing.

Human nature is immutable. Humans will always put their money where it is treated best. The more government abuses it - with taxes, laws and regulations - the less likely that government’s country, economy and citizenry will receive it. But we need not travel all the way to India to see that.

The United States has the world’s highest corporate tax rates – 39.1%. The annual cost of complying with the ridiculous array of just federal government regulations - is $1.9 trillion. That is a LOT of abuse of capital. Human nature - remains immutable.

U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes: “‘It just makes no sense to repatriate, pay a substantial tax on it,’ said Joseph Kennedy, a senior fellow at the Information Technology and Innovation Foundation, a policy-research group whose board of directors includes executives from Microsoft and Oracle Corp.”

Warren Buffett Knows Less Government Means More Economic Activity: “Warren Buffett’s Berkshire Hathaway is expected to help finance Burger King’s pending acquisition of Canadian doughnut-chain Tim Hortons. The deal will allow Miami-based Burger King to claim Canada as its new legal home for tax purposes….”

Watch 1,400 US Workers Learn their Jobs are Moving to Mexico: “‘I want to be clear — this is strictly a business decision,’ (Carrier President Chris)Nelson continued.…”

Trump Shouldn’t Blame Oreos - It’s Government and Unions’ Fault: “Oreos have been for years made in Chicago, Illinois (and several other American cities). Mondelez International, Inc. - the company that delivers us the chocolatey, spherical goodness - announced they would make their next wave of Oreo manufacturing investment not in Chicago, but in Mexico.”

And oh look - Net Neutrality is a terrible idea here too.

Title II (and Net Neutrality) Has Depressed Broadband Investment: “As evidence, (FCC Commissioner Ajit) Pai pointed to research that showed a decline in capital expenditures by the major wireless companies of 12% in the first half of 2015 compared to the same time period in 2014—when the FCC was still expected to restore open Internet rules without reclassifying broadband.

“'Only twice before have broadband service providers’ capital expenditures fallen on a year-over-year basis,’ he said, ‘following the dot.com bust in 2001 and the Great Recession in 2008.

“‘In my statement dissenting from the Commission’s Title II decision, I warned that [b]roadband networks don’t have to be built. Capital doesn’t have to be invested here,’ Pai said. ‘Risks don’t have to be taken. The more difficult the FCC makes the business case for deployment—and micromanaging everything from interconnection to service plans makes it difficult indeed—the less likely it is that broadband providers big and small will connect Americans with digital opportunities.' And that I fear is what we are now witnessing.’”

Water is wet. Snow is cold. And human nature is immutable.

If I invite you into my house - and then simultaneously pick your pockets and beat you about the head and shoulders with a bat - I should at least have the decency to not act surprised when you get up and leave.