Net Loss: Internet Prophets, Private Profits, and the Costs to Community

2. How the Federal Government Created the Internet, and How the Internet Is Threatened by the Government’s Withdrawal

How the Federal Government Created the Internet, and How the Internet Is Threatened by the Government’s Withdrawal 2 In a remarkable turn of societal imagination, many conservatives have begun picturing the computer age as the rejuvenation of small-scale entrepreneurial capitalism against the institutions of the nation-state. Alvin Toffler has talked about ‘‘demassification’’; George Gilder has cited the ‘‘quantum revolution’’; former House Speaker Newt Gingrich has promoted decentralization of government to local regions. A steady stream of conservative analysts have argued that new technology has made government ’s role, especially the federal government’s role, irrelevant and even dangerous to the healthy functioning of the economy. Even the Economist, a magazine with an early enthusiasm for the Internet and usually a somewhat more balanced eye, has described the success of the Internet as the ‘‘triumph of the free market over central planning. Democracy over dictatorship .’’1 The new conservative view: the private sector is the font of technological and economic innovation; moreover, the federal government should get out of the way and leave economic 41 42 Net Loss development to the private sector, working occasionally with local governments promoting innovation and job creation locally. Repressed in this bit of economic mythmaking is the key role that the federal government played in each step of the growth of the computer industry and in the birth and formation of the Internet. Further, this mythmaking ignores the fact that left to private industry, much of the computer technology would never have come to market and, in the case of the Internet, the result would have been less innovative and less of an economic engine for growth. In fact, it is unclear whether the integrated communication and information exchange that is the hallmark of the federally created Internet would have even come forth from the private visions and competition of industry. In the  election, Al Gore was lambasted by political opponents and the media for having suggested that he, as a mere politician, might have played a role in the creation of the Internet. This political pummeling occurred despite the fact that key Internet technology innovators noted his crucial role as a political supporter of funding for the technology over the years. However, the mythmaking surrounding the Internet was so strong that Gore’s justified claims (far more justified than most political claims) were made to seem bizarre.2 In this exploration of the nature of regional economies and the impotence of local government in the face of private industry, it is important to highlight the real power and need for national government involvement to ensure not just equity but also economic rationality. And the initial creation of the Internet highlights this contrast in a dramatic way. The Internet is in many ways the product of central planning in its rawest form: planning over decades, large government subsidies directed from a national headquarters, and experts designing and overseeing the project’s development . The government not only created whole new technologies to make the Internet a possibility; it created the standards for forms of economic exchange of information that had never before been possible. The comparison has been made at times to the interstate highway system. However, the analogy would hold only if employees of the federal government had first imagined the possibility of cars, subsidized the invention of the auto industry, funded the technology of concrete and tar, and built the whole initial system. Karl Polanyi has argued that the underpinnings of the rise of industrialization required extensive government involvement—from labor market regulation to creation of international currencies—just to make the launch of industrialization possible. In a similar fashion, it is clear that a Promethean role was required for government to make information networking an economic reality. How the Government Created the Internet 43 The government achieved a technical success where private industry would never have sustained the R&D over the decades required. Where private industry was working to create proprietary standards that would have stunted innovation and blocked shared networks, the government sustained and expanded open standards that encouraged the maximum sharing of resources. This allowed other public institutions such as universities to develop a stream of free, quickly distributed software that enhanced the network and allowed continual and rapid innovation. Beyond the technical success of the Internet, its development illustrated how federal planning and investment was a key to the success of the...