The President’s Internet Blunder

by alexvanbuskirk

The President’s Internet Blunder

By Nick Schulz @ National Review (July 19, 2012)

The real history of the creation of the Internet is far more complicated than the president seems to appreciate — and, as Andrew Morriss points out, that history suggests “today’s Net occurred as much despite government funding as because of it.” Nonetheless, let’s stipulate that it’s true that “government research created the Internet.” It’s not true that it created the Internet “so that all the companies could make money off the Internet.”

In other words, the creation of ARPANET was part of the nation’s critical investment in national-security and defense systems. Indeed, the modern commercial Net as we know it was an accidental spillover from this national-security project. The notion that it was done “so that all the companies could make money off the Internet” is bizarre.

The irony here is deep. President Obama has shown little interest in robust investment in national security and defense, be it technology or human capital. Quite the opposite, as my colleagues Tom Donnelly, Gary Schmitt, Danielle Pletka, and others frequently point out.

Of course, the primary argument for investment in defense is not that it might lead to beneficial commercial spillovers, although investment in defense often does so and this is worth keeping in mind. (For example, as the Breakthrough Institute has pointed out, “interchangeable parts were developed at public armories, originally for rifles.” The microchip, radar, satellites, and other technologies with significant commercial benefits were also advanced in large measure by military-development spending.) The argument is instead that doing so — securing the blessings of liberty and providing for a common defense — is the primary purpose of government.

It’s also important to note that whatever its rhetoric, the Obama administration hasn’t been all that interested in the kind of government investment that would lead to new, general-purpose wealth-creating technologies like the commercial Internet.

Take the case of the stimulus. If ever there was a case to be made for more investment as a way to increase growth (and subsequent federal revenues), it was with the Obama stimulus package.

But as economist and frequent Republican-party critic Bruce Bartlett recently pointed out, “As of March 31, $452.6 billion of net stimulus funds had been disbursed in ways that show up in the national income accounts. Of this, the vast bulk, $399.7 billion, went for transfer payments. Another $9.6 billion went for subsidies and $68.1 billion for capital transfers to state and local governments. Only $37.8 billion went for consumption and $11.8 billion for investment — the only two categories of outlays that we know add to growth.”

To the extent the Obama administration has been in favor of government investment, it has mostly been interested in explicitly political investments, such as in green-energy technologies; these expenditures satisfy elements of the president’s political base and have often been used to subsidize prominent supporters.

The shame is that there is a good argument to make in favor of government investment in basic research. It’s an argument that advocates of limited government should be comfortable making, along with their more spendthrift friends in government.

But this is not the argument the president is making. And given the spending priorities of the current administration, pointing to past government investment in national-security systems in making its case would be comic were it not so sad.