[arin-ppml] simple question about money

[Tom Vest]

On Jun 13, 2008, at 5:41 PM, Milton L Mueller wrote:

>> -----Original Message-----
>> From: Tom Vest [mailto:tvest at pch.net]
>
>> a "transfer" of resources that were previously defined and/or
>> treated as common pool resources, which makes those resources
>> alienable, and grants the initial recipients the right to choose
>> the identity, timing, and terms of transfer to subsequent recipients
>> is  privatization, plain and simple.
>
> The resources are already alienable, for any economic definition of
> alienable.

I'd be very interested to read something resembling argument rather  
than assertion here; references to real observations or data too.

> The right to choose the identity, timing and terms of transfer is new,

... and it basically completes the functional definition of  
"privatization."

> but it's a feature not a bug (an issue you keep ignoring).

I'll be happy to discuss the hypothetical benefits if you'll confirm  
that you are, in fact, advocating the full privatization of IPv4.

> That's the whole point. Those transfers will not take place  
> otherwise. So let's
> talk about whether the transfers are useful and needed.

That's also not necessarily true. I believe that there are other  
potentially viable mechanisms for facilitating the "recirculation" of  
IPv4 as necessary, as part of a transition to IPv6 -- mechanisms that  
will not have the same risks (i.e., non-reversibility) or perverse  
incentives as a transfer market is likely to have.

>> We may all wish to passionately assert otherwise. Perhaps
>> that passion
>> will have weight in legal proceedings. I'll guess we'll have to wait
>> and see. I readily admit that I'm not a lawyer; perhaps there are
>> lawyers with expertise in this new/emerging field on the list?
>
> <sigh> the issue is not all that new. E.g., the atmosphere is the
> ultimate common pool resource; and yet you can trade carbon emission
> rights with respect to it.

Milton, what makes a market useful? What makes a market "liquid"?
Can you point to a market for any other industrial input anywhere/ 
anytime that has the following characteristics:

1. Both scarce and absolutely finite, with no more production/ 
extraction possible.
2. Completely owned by incumbents in that industry (if not today then  
in 1-2 years per common assumption), who actually use the resource,  
and might have to purchase more themselves in the open market if they  
outgrow their own reserves.
3. Completely non-substitutable within the relevant industry, forever,  
unless/until the incumbents choose to make it substitutable.
4. Value is potentially very substantial, but 100% contingent on  
strategic preferences of the incumbents; when they choose to make it  
substitutable, value will diminish rapidly to zero.

And:

5. Supply is liquid, prices are relatively stable -- not constantly  
appreciating -- and "reasonable".

"Reasonable" is a pretty fuzzy term I'll grant you, so use this for  
context:

6. Relevant industry is critical to national, as well as other  
interests.
7. Public pricing information does not exist -- details of all  
transactions remain confidential.
8. Potential buyers have access to legal, regulatory recourse.

Note that the above is is not intended to impugn commercial operators  
in any way, other than to assume that they are subject to (at least)  
the same competitive pressures that exist in every other market. This  
is a coordination problem, but if it's thrown over the fence  
commercial operators will be punished -- by speculators, or investors,  
or their competitors --- if they fail to respond as "rationality"  
dictates.

> Yet, the air is not "privatized." You have
> spectrum auctions, but the government maintains all kinds of rights  
> over
> spectrum use, terms and conditions.

Yes, governments retain all sorts of rights don't they? Ahh, the  
privileges of sovereignty.
If you also wish to declare that you advocate ceding the RIR function  
to national authorities, I'll grant that this is a relevant comparison.

> (Read the fine print) And no one
> wants to go back to comparative hearings, the equivalent of RIR's
> "need-based allocations." ICANN's beauty contests for TLDs are a
> disaster as well.
>
>>> Do you seriously consider these moderate transfer policies as "shock
>>> therapy?" I guffaw, sir!
>
> I've read your arguments about shock therapy, and think they are not  
> so
> relevant. Like your use of the "P" word (privatization) I see only
> mental blocks and possibly scare tactics here. And perhaps I share the
> blame for that, having initiated the Deng Xiao Ping thing.

I have tried to lay out my reasoning. You may not find it persuasive,  
others may not either.
I've asked for corrections of fact or logic, and still look forward to  
them.
But I would likely be a lot more receptive to conversion if responses  
took the form of an empirically-grounded counterargument, rather than  
just "scary", "not new", "not relevant", etc.

Oh, and if the argument really is old, I'd love some citations too.

> Fact is, the Internet and the RIRs are already deeply, deeply embedded
> in a market economy. Consumers buy Internet service in a market; they
> buy PCs and networking equipment in a market, they buy content in a
> market, businesses buy and sell advertising in a market; they get the
> real estate out of which they operate in a market, and they buy  
> labor in
> a market.
>
> So we are talking about the insertion of a piddling amount of economic
> incentives into a tiny part of the internet market.

I like economic incentives too. I think it's going to be hard if not  
impossible to get through the transition that looms, whichever one we  
think that happens to be, without them. But I think that anyone who  
wishes to engage in market design had better understand the full  
context / incentive structure first.

> For you to compare that to the wholesale transformation of an entire
> (Russian/Chinese/Polish) that had spent 7 decades completely outside  
> of
> a market price system (and centuries in feudalism prior to that) is  
> just
> sheer panic-mongering.


If it's not new and not relevant then I doubt it can inspire much panic.
Once fully understood, it should inspire confidence (or at least some  
reassurance) rather than panic.
In the mean time, if you're suggesting that the Internet is somehow  
trivial as an economic phenomenon relative to the individual countries  
that have been mentioned, then we'll just have to agree to disagree.  
If you're suggesting that IPv4 is, at present, something less that the  
Internet's only global medium of exchange -- and I do mean that quite  
literally -- then I will also categorically disagree.*

And finally, If you think that the introduction of the first-ever  
market price system for the Internet's foundational medium of exchange  
will be any less traumatic than it has been in other spheres, I can  
only hope that you're right -- or better yet that we don't have to  
risk finding out the hard way.

> Unlike formerly communist countries, RIR reforms take place in a  
> rule of
> law, fairly clear lines of authority within ARIN, an independent
> judiciary outside of it. No commissars in the U.S. DoD will be making
> off with half the address space....er, ooops, I guess they have  
> already
> done that, haven't they? But they did that years ago without any need
> for address transfers, didn't they? Indeed, a transfer scheme might  
> give
> us some change of recovering that....


Of course everything you say is true, but also irrelevant and  
immaterial. There are many things that I would like to see survive (at  
least) this transition -- most importantly the capacity of the  
Internet to support new entrants, new applications and services, on  
terms that are (at least) no worse than those enjoyed by past and  
current stakeholders. I think that the system of self-governance (the  
alternative to which is sometimes called "arbitrary partition" by an  
illustrious industry colleague) is useful to that end, and I even  
think that the RIRs have been a useful element of that system of self- 
governance. I want to see these things survive not merely in form, but  
also in substance  -- i.e., survive because they're still delivering  
on (at least) their intended purpose, and our current aspirations for  
the Internet, if not more. Survive because if they didn't we'd want to  
reinvent them, but might not be able to.

And as the violins swell, I bid you all a good weekend ;-)

TV

*Paper with more details forthcoming.