But your pessimistic scenario doesn't HAVE to happen. Free internet is widely available in East Asia. In Taipei, for example, free internet is available in convenience stores, rapid transit, city buses, coffee shops and many other places.
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There's plenty of Wifi hotspots free to customers of various stores in the USA also.
I'd like very much to see mesh networks take over the last mile. Of course, there's a lot of things I'd like to see I never will =p
While it's true monopolies don't have to start charging more when competition drops off, they always do.
One important fact is that the Taiwan government takes an active interest in making the internet widely available, instead of making allowing it to be slow and priced out of reach, as is the case in many parts of the US.
We are struggling with monopolies here. I hope you don't.
Corruption is a fact of life, no matter where you live. Taiwanese expect their politicians to steal (it's an open secret that certain lawmakers have underworld connections).
Average citizens just hope and pray that the lawmakers get a few important things done and don't steal too much ;-)
The fact that many politicians' families were literally dirt poor only two generations ago also helps (we don't have an imperial capital).
I cannot recommend such government as an improvement over anarchy.
So, I am an anarchist. I prefer the term 'Autarch', as I reckon that rather than no ruler, I am my own ruler, and so are you, and everybody else.
Human nature being what it is, we are all social creatures. It is inevitable that we come together to get things done: hunting a mastodon, building a skyscraper or doing brain surgery. This is where competition and hierarchies emerge quite naturally.
When well-educated, ethical people are in charge, the American experiment in limiting government power is partially effective. Perhaps that's the best we can hope for?