Who does a better job of serving poor and low-income Americans and students by providing free, high-speed Internet access to those who can’t afford it at home – the government or the market?
Well, there are 15,000 Wi-Fi-enabled public libraries in the country that provide free Internet access. But many public libraries are closed when people and students actually want to access the Internet, like in the evenings, on weekends and on holidays.
The WSJ points out today that McDonald’s has 12,000 Wi-Fi-equipped locations in the U.S., and Starbucks has another 7,000, and they both offer free access, even for those who don’t buy anything. Unlike public libraries, McDonald’s and Starbucks are open in the evenings, on weekends and most holidays.
In terms of addressing the “digital divide” or “Internet gap in education,” you could make a case that the profit-maximizing, private sector is doing a better job than the public sector – McDonald’s and Starbucks have more locations and longer hours than the limited-access public library system.
There’s another issue here, and it’s related to my WSJ article last week with Don Boudreaux about the non-stagnation of America’s middle class (and lower income Americans). One of our main points was that personal consumption expenditures on life’s “basics” (food, clothing, footwear, cars, housing, furniture, appliances, electronic goods, etc.), as a share of disposable personal income, has been declining consistently over time, thanks to the decline in the real cost of goods produced competitively by the market. In a post on Cafe Hayek following our article, Don wrote:
“Care must be taken when measuring consumption quantities according to the amounts or the proportion of real income spent on various consumption goods. Suppose a statistician who died in, say, 1973 is resurrected today and immediately hurried to the task of measuring Americans’ ability to communicate today as compared to the mid-1970s. Being unaware of the huge change in telecommunications products over the past 40 years, that statistician might conclude that Americans today are far worse off on at least one dimension of communications: talking in real time to people who are more than 20 or 30 miles away. The reason for his dreary conclusion is that the amounts that Americans spend today buying long-distance telephone calls within the United States has plummeted, both absolutely (in dollar terms) and, of course, also as a portion of household expenditures. But obviously such a conclusion by this statistician would be a great mistake.
Consumption expenditures change with changes in the prices of the goods and services consumed or with changes in the quantities consumed (or both). A once-scarce and high-priced service (long-distance telephone communications) that is now super-abundant at the margin (and, hence, priced at $0) shows up as being unconsumed if the statistician looks only at the amounts of money spent on the service.”
MP: It’s worth noting that Internet access at McDonald’s and Starbucks is another example (like long-distance phone calls) of how consumption of a previously expensive service – high speed Wi-fi – that can now be consumed for free at retailers, won’t show up as a “consumption” expenditure if we only count money spent on Internet access, and that will distort a comparison of consumption today to a previous period. Millions of hours of Internet access are now being consumed for free, which obviously improves the lives of millions of people every day, especially low-income Americans, and it’s not captured at all using traditional measures of consumption spending.
Also, free wireless Internet at McDonald’s and Starbucks is another example of how consumption inequality has decreased over time – the high-speed Internet access that many of the wealthiest Americans have at home probably isnt’ that much better than the Wi-fi a teenager can access at the local McDonald’s.