What's a Rare Luxury Today will Be Owned by the Average Man Tomorrow
In 2015, the federal government (namely, the FCC) implemented new monopolistic regulations which it called "net neutrality." In 2017, the FCC then repealed some of these regulations. In the weeks and months preceding the repeal, various billionaires and other leftists hysterically predicted that the end of net neutrality would usher in a dystopia in which only the super rich could access the internet.
What they were really opposing, of course, was a return to the internet's status quo of 2015. And we all know what a living nighmare that was!
In reality, of course, internet access has grown continually over the past two decades in the absence of net neutrality, and has now become commonplace. Like most technologies, public access to this "luxury" has only grown over time.
This is how markets work, as Ludwig von Mises pointed out:
Thirty-five years ago there were no automobiles; twenty years ago the possession of such a vehicle was the sign of a particularly luxurious mode of living; today in the United States even the worker has his Ford. This is the course of economic history. The luxury of today is the necessity of tomorrow. Every advance first comes into being as the luxury of a few rich people, only to become, after a time, the indispensable necessity taken for granted by everyone. Luxury consumption provides industry with the stimulus to discover and introduce new, things. It is one of the dynamic factors in our economy. To it we owe the progressive innovations by which the standard of living of all strata of the population has been gradually raised.
In a recent column for Forbes, John Tamny takes note of this reality, examining how the left's alarmism over net neutrality has no basis in the actual experience of the marketplace:
In 2006 Ford Motor Company discontinued its Ford Taurus. At the time Saturday Night Live’s comedy writers described the Taurus (this is a slight paraphrase) as “the car for people who’ve given up." Eventually Ford brought back the automobile associated with average. Interesting there is that a $31,000 2018 Taurus has 4-wheel ABS, dual front side mounted airbags, front and rear head airbags, dusk-sensing headlights, a blind spot warning accident avoidance system, rear parking sensors and a rear-backup camera (to avoid dings), and a heated steering wheel. Electric seats are a given.
Back in 2006, only the higher-end suites at the Four Seasons in Austin, TX (the city's most luxurious hotel) had flat-screen televisions. The regular rooms still had the box-shaped version. But by 2015 flat-screen tvs were standard not just in rooms at the Four Seasons, but also in most any Motel 6.
Air travel? Those rich enough to fly used to travel with flip flops, but only in their bags. They dressed up for what was a rare luxury. Nowadays people walk on to planes in flip flops, shorts, tank tops, and other garments associated with highly casual dress. Flying is what we all do now.
All of this is a reminder of what readers of this column know well: “luxury” is an ephemeral concept. Today’s obscure bauble of the superrich is tomorrow’s common good. In a growing economy prices are falling all the time. They are because investment is the driver of growth, and investment is all about producing more for less.
What's also crucial when it comes to falling prices is the “venture buyer.” And while the truth about “venture buyers” may cause the heads of the overly sensitive to explode, venture buyers are rich. Often wildly rich. So rich that they can spend enormous sums on goods and services that aren’t broadly used, or understood. These buyers are crucial to progress because they can uniquely test the products put on the market by entrepreneurs and businesses. If they prove useful, great. If they’re duds, the rich are out substantial sums. That’s ok. Figure that they’re superrich.
Still, the goods and services deemed worthy by venture buyers act as a signal to the entrepreneurs and businesses, and the signal is clear: the innovators capable of mass-producing what superrich venture buyers uniquely enjoy will similarly become superrich themselves. There. It’s been said. Great wealth, the kind of wealth that causes inequality to soar, is frequently a function of entrepreneurs democratizing access to the goods and services formerly enjoyed by the rich alone.
There is no reason whatsoever to believe that access to the internet is going to diminish in the absence of a 2-year-old regulation that has been recently repealed. Experience suggests exactly the opposite.