11.04.2011 0

‘Connecting America’ More Venture Socialism

By Howard Rich — Lacking any clear statutory authority, the Federal Communication Commission (FCC) nonetheless voted last week to force American consumers to subsidize a massive expansion of rural broadband infrastructure.

“Broadband has gone from being a luxury to a necessity for full participation in our economy and society,” FCC chairman Julius Genachowski said during a speech in early October.

To stimulate this “necessary participation,” the FCC’s so-called “Connect America Fund” will spend $4.5 billion a year over the next six years siphoning money away from America’s telephone subscribers.

Government bureaucrats are understandably ecstatic — promising that this “historic” vote will lead to the creation of 500,000 new jobs.

Consumer advocates know better.

“The Commission’s actions will lead to higher prices at a time when the average American is watching every penny,” said Gigi B. Sohn of Public Knowledge, a group that advocates for digital freedom.

Sohn added that the Commission “has once again evaded the central problem” by moving forward with this new fund despite lacking authority over broadband issues.

“By declining to address this issue, the Commission is condemning the industry to more years of uncertainty, consumers and others will be powerless to complain about industry practices and the future of the network is left in limbo,” Sohn said.

Of course the “Connect America Fund” is more than just another flagrant government shakedown of taxpayers and naked bureaucratic power grab.  Like the “Green Jobs” scam that brought us the infamous Solyndra scandal, it’s yet another example of government fundamentally usurping the private sector’s role of allocating capital.

In fact, the government’s new “broadband scam” already has its own Solyndra scandal — a company called Open Range.

Right around the time Genachowski was making his “necessary participation” speech, it was revealed that Open Range filed for bankruptcy despite being approved for $267 million in loans from the U.S. Agriculture Department.

Ironically, it was a decision by the FCC to deny a special license to Open Range’s business partner, Globalstar, that led to the company’s collapse.  Some have even speculated that the FCC deliberately denied this license because it was promoting a competing venture involving LightSquared, a company backed by a powerful Democratic fundraiser.

Imagine that — one government bureaucracy works to jump start a specific company while another effectively shuts it down!  No wonder government has such an abysmal record of picking winners and losers in the marketplace — a function it was never supposed to wrestle away from the private sector in to begin with.

Open Range’s loan was approved by the Bush administration — which is why Congressional Democrats are pushing to have its collapse investigated alongside Solyndra.

But what’s needed is not a Washington hearing aimed at scoring political points — what’s required is an immediate reversal of government’s entire approach to economic development.  For starters, the FCC could resist the urge to drain $27 billion out of our shaky economy over the next six years for the purpose of empowering broadband bureaucrats.

In fact, buried within the Solyndra emails is an acknowledgement of the failure of such government-run scams — by none other than the recipients and dispensers of this taxpayer-funded largesse.

“The government is just not well equipped to decide which companies should get the money and how much,” a Solyndra executive wrote to White House economic adviser Larry Summers.

“I relate well to your view that (government) is a crappy vc (venture capitalist),” Summers responded.

As these emails make plain, the free market — not government — is the most efficient creator and allocator of capital.  Our nation can either recommit itself to this immutable truth or continue to fight it – which will only move our country further down the road toward European-style socialism and economic ruin.

The author is chairman of Americans for Limited Government.

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