Tuesday, November 13, 2007

The FCC Wants to "Save" Newspapers

The chairman of the FCC argues that changes in restrictions on media ownership are necessary to "save" the newspaper industry.

But whenever government thinks it needs to "save" an industry, we should all get suspicious. Why is the newspaper industry so inherently worth saving? If the industry is failing, isn't that just because there isn't demand for that industry? If there is insufficient demand to justify producing it, then taking steps to encourage production of that thing amounts to no more and no less than a complete waste of resources that could be used on something more highly valued by a society.

I suppose you could argue- and many have- that newspapers provide a "public good" by giving people the news. But why must this "public good" be provided in a specific, offline, print format? If the demand is for online and television news, then why not allow the market to run its course and meet that demand?

Now, I'm not sure that loosening rules about media ownership in given markets amounts to "corporate welfare" in the traditional sense, as Marty Kaplan argues at HuffPo. After all, eliminating restrictions on free markets is a far cry from subsidizing industries or giving them massive tax credits.

That said, Kaplan hints at an important issue- the FCC gives broadcast licenses away for free- they are not auctioned off as far as I know- and there are a limited number of these licenses. As a result, the primary criteria for granting or maintaining a broadcast license can only be how much "pull" the broadcaster has. As a result, you essentially wind up with something not horribly different from a government-sponsored monopoly, in which only a handful of companies control almost all of the media outlets- this isn't capitalism in any recognizable form.

By removing restrictions on media ownership of newspapers and television stations, the FCC isn't so much allowing for a freer market as it is obtaining greater power for the FCC to give licenses to companies with a lot of political "pull." So while Kaplan may be wrong that the proposal amounts to "corporate welfare", he is at least correct to be concerned with the rule insofar as it allows for more "crony capitalism" in general.

But there is a way to put a stop to issues of "crony capitalism" on the airwaves: stop thinking of them as "public airwaves." If we just auctioned off all the frequencies in all the markets, we would actually have a real free market in the media. I know, I know, it's crazy....but then again, so are all of us "radicals for capitalism"!

(via memeorandum)