LegoPower77
Abecedarian
Premium
join:2002-08-03
Arlington, VA
| Yes of course, we want to do things the way Europe does it with their .2% growth and double-digit unemployment numbers  . The fact is, market concentration (so-called monopoly) is not a bad thing. Sometimes it is the case that only huge eeevil companies can spend the $ for research and development.
Standard Oil is one often cited as being a "monopoly" (though at their apogee they still only had 70% market share) but look what they did, N.B.: they lowered the price of crude from some 40$ a barrel to mere pennies. In fact, when "monopolies" do occur, they end up lowering the price for consumers (heck, Microsoft got in trouble for giving their product away for free)!
So I say all this to try to point out that market concentration is not the bogeyman that so many in here make it out to be. As Friedrich Hayek points out in his essay The Meaning of Competition, “Enthusiasm for perfect competition in theory and the support of monopoly in practice are indeed surprisingly often found to live together.” The reason for this is that people get so caught-up in trying to make everything “competitive” that they end up distorting the market by excessive regulation. We just need free markets, and that's what Mr. Blonder's article is about.
Now to the point about the FEC taking control of the radio spectrum:
Government succeeded in gaining control of radio by promulgating the public property view of radio. This idea is mistaken because radio only meets half of the requirements for public goods; indeed, radio fails the first and most important: it is scarce. The four requirements for public goods are:
•Not scarce.
•Joint consumption—people use it at the same time.
•Consumers do not pay producers.
•Non excludability—it costs too much to police free riders.
Radio fails the public goods test on the first count because it cannot be said that radio is scarce. Once something is being broadcast, another transmission on the same frequency will either block or override the first. The radio stations that we listen to only come into existence after human action converts sound into radio waves and broadcasts it. Also, the number of radio stations is limited by scarcity of resources needed to build, administer, etc.
Radio fails the public goods test on the third count as well. While not glaringly obvious, the consumers actually do pay producers in the radio market if we think of the advertisers as consumers of radio. While there is no direct link from the listening public to the purchasers of radio broadcasts, i.e., advertisers, the programming reflects what the general public wants.
Regardless of these objections, the idea was accepted that radio is a public good and should be controlled by the state. The effect of this was to destroy the property rights attached to broadcasting and ipso facto get rid of the incentives to organize radio. This caused radio to become chaotic and stagnate as an industry, so it then fell to government to bring order. (It only follows, if government artificially makes the medium public, then they should also organize it as well.) The state of affairs in radio was used to justify government control, but notice how government distorted the market and then the blame was cast on the free market pariah. (Currently, the health care system in America has faced the same mechanism of command and conquer.)
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"Those who want to take our money and gain power over us have discovered the magic formula: Get us envious or angry at others and we will surrender, in installments, not only our money but our freedom"—Thomas Sowell. |
