CDD and Neutrality Regulation: The Era of Trickle-Down Rhetoric is Not Over

by on June 9, 2006 · 2 comments

Never mind fees for priority broadband service. What this nation really needs is a fee on anyone still using the term “trickle-down economics.” In a post yesterday on Digital Destiny, Jeff Chester of the Center for Digital Democracy pulled the Commodore-era cliche out of his white hat, in a blogpost entitled “Memo to Heritage’s James Gattuso: The era of trickle down media economics is over.”

The trickle down era is over? Well, ok. I never said it wasn’t. I never said trickle down at all. I honestly don’t know what “trickle-down media economics” even means.

Chester’s memo follows an earlier post criticizing my recent Heritage Foundation paper on neutrality regulation as “a litany of rationalizations and under-developed analysis.” Sensing that he disagreed with me on some points, I read on to see where my paper had gone wrong. But he didn’t say. Instead he focused on Heritage’s funding, promising a substantive response in “our next post.”

I think yesterday’s memo was the promised response. Surprisingly, however, it only contained one paragraph that addressed anything I wrote in my paper. Specifically, Chester referred to my argument that the proposed rules would lead to a regulatory quagmire at the FCC. And on that he agreed: “Yes, Mr. Gattuso. It would lead to lobbying and lawsuits.” He simply disagreed as to whether lobbying and lawsuits would be that bad a thing (while blaming them on the network owners). On this point, I’ll hold my ground, especially in light of the FCC’s spotty history of settling such issues in less than a decade or so.

There are no more references to my paper in the lengthy memo. There is, however, quite a bit on other topics. Many of these topics are quite interesting, and I should write on them some day. Here’s a sampling, and my quick reactions:

* Chester takes issue with the proposition that “technology, if left unfettered, will fulfill its potential.” He pledges that “we are not going to let them do to the Internet what they have done to commercial broadcasting and cable communications.

I’m not quite sure what specific result he has in mind. Perhaps it is the hundreds of channels now available to consumers, or perhaps to the multiple 24-hour news channels they can watch. Perhaps he means the new IPTV networks now being built. If so, I’ll be glad to take the fall for these travesties.

“Just leave us alone, eliminate all public interest policies:That’s what commercial radio said in the early 1930s. Broadcast TV echoed it during the 1950s.”

Well, actually, they said “Leave us alone in our markets, and limit our competition. In return, we will accept public interest polices.” Regulators took the deal, and for decades most Americans had, in Chester’s words “no real diversity, little in-depth journalism, barely any competition.”

* Chester says that we say “the public are just consumers.” But he says the interests of others: teachers, parents, children, journalists, etc.” must also be taken into account.

I don’t apologize for advocating consumer welfare. I thought Chester was a consumer advocate too, but if he doesn’t want the role, he should say so. Of course, people have other interests too. Important ones that also need to be protected from government interference.

* Chester says we “espouse that the interests of the network provider should be paramount.” No (see above). We espouse consumer interests. But two are not always, or even usually, incompatible. In fact, in a well-functioning market, its in the provider’s interest to find out what the consumer interest is, and provide it.

* Conservatives, he says, “are saying, don’t worry, if there are problems–our bloated, corrupt and ineffective governmental institutions can take care of you.”

Jeff, perhaps you haven’t been paying attention. We want to minimize the role of the bloated, corrupt and ineffective governmental institutions. It’s your side that’s in favor of these things. If I’m wrong, then I’ll be the first to welcome you aboard the limited government bandwagon.

* Chester says that the future of the Internet shouldn’t be television. “We deserve better.”

I agree. But what if consumers (oh, that word again:) actually want television? Should policymakers override those preferences and make consumers want something else? Markets are the mechanism by which consumers express want they want. The job of policymakers is to make sure that mechanism works, not to define a their own preferences.

I don’t know if all this represents trickle down, trickle up or trickle sideways economics. I don’t really care (although I would prefer a less-dated moniker). But I do know that any trickle would be better for Americans than Mr. Chester’s flood of new regulation.

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