We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Why the US Pulling Out of the UPU is a Big Deal

Yesterday, the US initiated the process for pulling out of the Universal Postal Union (UPU). This 144 year old institution is responsible for multilateral negotiation which sets rates at which packages approximately 5 pounds or less can be shipped. In age where government postal services competes in the market with companies like FedEx and Amazon, it seems absolutely absurd that a UN specialised agency is responsible for shipment rate setting in the 21st century.

While this might seem like a very boring and mundane situation, it is in fact a big deal. This has nothing to do with Trump and how the US is dealing with foreign affairs. This has to do with the US signalling that it is finished with institutions, which have been captured by certain countries with special interests, which use international organisations to legitimise their national agendas. In a statement, the US Chamber of Commerce said that the system is “exploited by a handful of countries.” Unfortunately, this trend occurs widely across the UN system and multilateral organisations. Take a look at the WTO and the UN Human Rights Council, for example.

Another case in point is the International Telecommunications Union (ITU). Like the UPU, the ITU was founded over 150 years ago in order for international negotiations of telegraph exchanges to take place. Currently it is responsible for global spectrum harmonisation, satellite orbital assignment and telephone numbering. However, in the 1980s a majority of member states agreed to use the ITU to set call termination rates between international calls. The US opted out of this process because telecommunications was liberalising and competition among telecoms companies as well as governments allowed for lower termination rates and a market based system. Arguably, this allowed for the dial up days of the Internet to emerge and develop rapidly.

I can raise many issues with multilateral institutions in the 21st century. Most of these institutions have a number of national members of the dictatorship persuasion that wish to control new and emerging technologies primarily developed and run by the private sector. I have written about this here, for example. However, the point that I wish to make here is that old institutions that are no longer fit for purpose need to die so that new institutions and organisational arrangements can emerge, as Douglas North noted. Within the UN, nothing ever dies.

An evening with Frank Turner

Last night I attended the final gig in Frank Turner’s current tour for his excellent new album Positive Songs for Negative PeopleThe gig was packed and full of people dancing and singing as loud as they could. It was an unexpected great experience. It was a sort of home coming for him after a long tour and busy few years.

Frank is a self-styled classical liberal and I started to have a look back at the posts from Brian back in 2014. It struck me that Brian picks up on something that said back then, “he is the living embodiment of the above notions”. He isn’t political and shouldn’t be held up as a god for libertarians, but he does what we all probably do – go about living our lives, being passionate about what we do, caring for friends and those who need help and not apologising for our views. In essence, we need to remember that in these turbulent days we need to do the one thing that we can do to change the world. That is we need to live as best we can by living in what we believe in. And for that reason going to his gig so soon after the Bataclan was probably one the best things that I could do as a music fan.

As someone who used to work in the music industry in London I’m surprised that we never met in the middle of all the industry people, talented musicians and amagi tattoos. As he is my neighbour in Islington, I invite him to have a drink and get to know a few of crazy classical liberals.

Of competition, rent seeking and the UK government broadband project BDUK

A comment piece over at the Guardian has compelled me to write my first post on this fair blog. I have been mulling over the idea about writing something about rent seeking and fixed lined broadband rollout in the UK for some time, but BT’s great broadband scam has pushed me over the edge finally.

The Guardian writer blames the market, competition and Margaret Thatcher for the fact that BT has won all of the government contracts to build fixed line broadband in the UK.Though most Guardian writers blame this triumvirate for most things, this writer makes a tenuous link between BT and competition ultimately calling for the renationalisation of broadband in this country. (He sounds much like Susan Crawford over in the US, but that is a post for another time) But what he gets so very wrong about blaming competition for the inability for the government to rollout broadband is that it is BT’s rent seeking behaviour coupled with a centrally planned project that has contributed to the so far unsuccessful UK broadband rollout project called BDUK.

There are so many reasons that BDUK has not succeeded that it hard to know where to begin. But for the purpose of this post it is important to understand that the broadband targets and rules for entering into procurement as a provider changed over the course of the last three years. Initially, the project was to provide next generation access (NGA) to 100% of the UK by 2015 and now it may only succeed in delivering 90% by 2017. Fibre to the home (FTTH) was the initial target and eventually fibre to the cabinet (FTTC) became the final and less optimal solution. The regional areas that divide up the entire BDUK project into smaller, sub-project areas were far too small to achieve economies of scale. The list goes on, but changeable rules against which companies and consortia were to pitch to be on the ‘approved’ list meant only risk and uncertainty for those businesses. In the end only BT survived and thus BT became the monopolist provider.

But if I ran BT I would make sure that I was the only procurer on that list through whatever means possible, including rent seeking. And that is precisely what they did. OFCOM, the telecoms regulator, DCMS, the department responsible for BDUK and BT have a cosy relationship with advisors and consultants making the rounds in contracts and positions among all three. But BT has a massive incentive to ensure that their fixed line broadband network became the only networked used to rollout new broadband services. If other vendors were chosen for BDUK then this old network, made up of traditional copper lines and some fibre, would be completely bypassed thereby rendering the network useless. Quite high stakes if you are that behemoth BT. Even an outsider’s attempt to petition DCMS to include wireless in its definition of ‘next generation access’ failed because it would mean using a new and probably non-BT network. Not allowing wireless as one of many ways to achieve rural broadband access is essentially absurd in this day in age. But the BDUK project stipulated only fixed line Internet access at delivery.

So while we do indeed have competition in urban areas and many rural areas for broadband access services (as most services like TalkTalk rent BT lines at wholesale prices) we have very little competition in broadband infrastructure and that is an important difference. BT has played their cards well in a centrally planned system created by civil servants who have made policy in order to achieve the delivery of fixed line broadband Internet access. No one person is to blame, but through bad policy making, EU regulations, rent seeking by BT, and no comprehensive oversight, we have a project that will be delivered well over time and budget and paid for by the taxpayer. True competition in services, diversified Internet access types, and infrastructure would have delivered far richer choices. Currently BDUK remains Hayek’s worst nightmare.