News Release

October 28, 2002

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"Cyber-pork" unnecessary and harmful
New Cato study outlines the dangers of high-tech interventionism

WASHINGTON -- A new crop of tech-related congressional spending initiatives, reminiscent of the New Deal of the Depression era, will only further hamper the technology sector while wasting taxpayer dollars on alleged problems that markets will solve without subsidization. While these handouts may be appealing to the industry, in the long run they will serve only to entrench government meddling in the private sector.

The multi-million dollar taxpayer funded proposals are detailed in a new Cato Institute Policy Analysis, "Birth of the Digital New Deal: An Inventory of High-Tech Pork-Barrel Spending." Cato's Adam Thierer, director of telecommunications studies, Clyde Wayne Crews Jr., director of technology policy, and Research Assistant Thomas Pearson outline several of these programs and explain the inherent problems that each one poses.

The purported goals of these new interventionist initiatives are to increase broadband access to the Internet, educate and encourage the general public to use new technologies, increase cyber security, and provide capital for research and development. The authors argue that it's unnecessary for government to get involved for various reasons. Access to the Internet and the use of computers has spread faster than any other technology in history. Cyber security is an issue that is largely best left to the private sector, which can react quickly and efficiently to cyber threats. Further, demand for new telecommunications and Internet-related products provides ample incentives for privately funded research and development.

Thierer, Crews, and Pearson argue that there are many dangers associated with the recent increase in "cyber-pork" initiatives. "Washington subsidy and entitlement programs...often open the door to increased federal regulatory intervention," they argue. Additionally, these handouts from the government have the potential to make the high-tech industry much more politicized, relying on the "whims of federal legislators and regulators."

The authors conclude: "Interventionism will cause more problems than it will solve...In the short term, the allure of a Digital New Deal and its corresponding shower of subsidies and government attention may seem too good to pass up, but there'll be hell to pay once the honeymoon is over."

"Birth of the Digital New Deal: An Inventory of High-Tech Pork-Barrel Spending"