FC: Al Gore, Internet enemy? by George Gilder

[Declan McCullagh <declan () well com>]

[An opposing view to Krugman's piece I sent out Monday (at 
http://www.politechbot.com/p-01443.html). --Declan]


From Friday's _Wall Street Journal_:

Internet in the Balance
By George Gilder

A few weeks back, Al Gore, mocking his own penchant for hyperbole, bantered
with David Letterman's "Late Show" audience: "I gave you the Internet - and
I can take it away." This is no joke. While Republicans waste time with
captious critiques of the straight-arrow Gore's credibility and character,
the real threat posed by the Democratic candidate is utterly ignored. Mr.
Gore's policies would impose an energy, tax and regulatory garrote on the
Internet.

The Kyoto Treaty alone would be devastating to the Net. At a time when
global temperatures are significantly lower than they were 1,000 or 3,000
years ago, Mr. Gore would impose an energy clamp on the U.S. economy over
the next decade. Yet billions of new Web servers and Web devices are
scheduled to come onto the Net during this period, while billions of
now-poor Asians will also be drastically increasing their energy usage.

With each Web device draining as much as a megawatt-hour a year, a billion
always-on Internet computers - together with the factories that build them
and scores of billions of watt-hungry embedded processors - will account for
an estimated total of four thousand trillion watt-hours, or close to half of
the world's current electricity use. With the restrictions negotiated in
Kyoto, a global broadband Internet cannot happen.

On the tax front most attention focuses on direct sales taxation, but the
key taxes imposed on Internet expansion are income taxes. Mr. Gore's most
passionate commitment is to bar all tax reforms that reverse the Clinton era
income-tax gouges. Mitigated by the one-time effect of the collapse of
inflation and thus of real capital-gains tax rates, the Clinton tax hikes
have so far had a mild impact.

But inflation cannot collapse twice. Mr. Gore's adamant hostility to
tax-rate reductions is already inhibiting Internet growth by halting stock
market expansion. With new sieges of taxation and spending, Mr. Gore would
create not a delusory "lock-box" for Social Security, but a "lock-out" of
the entrepreneurial economy on which the Internet subsists.

Perhaps most menacing is the threat of Gore regulatory policies and
attitudes on the advance of wireless technology. Wireless access will fuel
the next phase of Internet growth. But the environmental and regulatory
passions central to Mr. Gore's entire career are now driving wireless
innovation overseas.

As Eli Noam of Columbia has said, "If we can agree to oppose government
industrial policies to subsidize telecom, cannot we also agree to oppose the
levying of huge special taxes on the industry?" Yet the proudest achievement
of Mr. Gore's favorite agency, the Federal Communications Commission, is a
vast new tax on the wireless Internet. ...

As with all forays into industrial policy, the predictable result is to
subsidize the past in the name of progress, enlisting government firmly on
the side of the largest and most moribund companies and thwarting innovation
and entrepreneurial energy. The danger of Mr. Gore is not the quasi-populist
hostility to big business he pretends, it is his technical conceit and his
all too real lust to control - and take credit for - what he did on create.
...

...Like the cock crowing at sunrise, Mr. Gore imagines that his legislative
incantations about "information superhighways" were crucial to the creation
of the Net in the first place. A cock-a-doodle-doo policy cannot bring
innovation, but capricious regulation can bring Internet growth to a halt.
...

...Mr. Gore's policies put the Internet in the balance.

Mr. Gilder, author of "Telecosm: How Infinite Bandwidth Will Revolutionize
Your World" (Free Press, 2000), is an investor in Internet and wireless
stocks.




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