Tech Is Resisting Inflation, So Why Is Government Trying to Regulate It?
Americans are facing levels of inflation not seen in decades and every trip to the grocery store or the gas station takes a bigger bite out of their paycheck. The latest report from the Bureau of Labor Statistics shows that inflation over the past year is 8.3 percent. For most Americans, daily costs have been even higher. Gas prices have increased by 43 percent over the last year, grocery prices have increased by 10.8 percent, and new cars have increased 13.2 percent.
Yet, the technology sector has been largely immune from inflationary pressures over the last year despite increasing concerns about market concentration in the sector.
Lately, though, many in Washington and state capitols have looked for ways to regulate tech. This has included attempting to regulate internet service providers like a utility and breaking up large tech companies through antitrust law. But given recent inflation numbers, doing so is likely to make consumers worse off.
Take internet services which many in Congress and at the Federal Communications Commission want to regulate like a utility. Internet prices increased 1.7 percent over the last year even with supply chain shortages and increased demand from consumers. Likewise, wireless phone services, the way many people access internet, have decreased in price over the past year by .7 percent. Meanwhile, electricity increased by 11 percent and water services have increased by 4 percent. If internet was following the cost of utilities, it would currently be more expensive to most Americans.
Other examples of technology products remaining relatively insulated from inflation include smartphones, which decreased by 16.1 percent, televisions which decreased by 5.8 percent, and music subscription services which didn’t change at all over the past year.
Technology prices have remained low even as the average American deals with shortages and overall price increases. This should be a signal to lawmakers that the tech industry remains incredibly competitive.
Yet, many are claiming that the industry is far too concentrated and that revising antitrust laws to break up companies is the only way to address the issue. Doing so would likely make inflation even worse off for consumers.
Many of the services provided by tech companies don’t require a consumer to pay but still provide immense value. When consumers were asked how much they would need to be paid to give up some of these services, the numbers they came up with were quite large. Giving up maps would require a payment of $3,600, giving up email would require $8,400, and giving up search would require $17,500 per year.
With all these benefits, it’s not a surprise that only 1% of Americans think that regulating the technology industry is the biggest issue facing the country today.
The fact that technology is resisting inflation does not mean there are no legitimate concerns about technology’s effect on our lives. Americans are rightly concerned about their privacy online, especially from the government, and more can be done to ensure that all Americans have access to affordable and reliable internet. But plans to reorder the entire technology sector of the economy when Americans are facing inflation not seen for a generation is a mistake. Lawmakers should focus on the issues affecting everyday families rather than making problems worse by reaching to regulate tech.