DTV Subsidies: Not So Invisible Hands Reach For More

by on September 28, 2006

Remember the digital TV converter box subsidy? Last July, the Department of Commerce released for comment some fairly sensible rules for administering the program, given the constraints set out by Congress.

The deadline for public comments was this Monday, and–to no one’s surprise–quite a few commenters wanted more money. The broadcasters and TV manufacturers, for instance, complained that the program would be limited to households that do not have cable TV. “No television left behind,” was the unstated theme, as they expressed concern over disconnected televisions in basements across America.

A coalition of retailers–including firms such as Wal-Mart, Best Buy and Circuit City–supported this position. They argued for “leaving such issues to the marketplace, by letting those citizens who believe that they need a Converter apply for a coupon to get one…” This is indeed a novel reading of Adam Smith. Everyone who wants a subsidy should get one. It’s a variant of the invisible hand: outstretched and palm up.

But the retail stores didn’t stop there. They also argued that they should be directly compensated for accepting converter box coupons. The “investments, expenses, and risks,” they maintained, should not be placed “solely on the backs of retail vendors who come forward to participate in this program.”

Let’s recap. The DTV program will cause millions of consumers to drive over to their local Circuit City or Best Buy or Wal-Mart, coupon in hand, to buy converter boxes. The stores can charge whatever they want for these boxes. They will also be reimbursed by the government for the face value of the coupons. A fair number of these consumers–once in the able hands of the store sales staff, will no doubt end up buying brand-new digital televisions from the retailer instead of a puny converter box. And the stores want to be paid for the burden of handling all this additional business?

Nice try. But the argument is utter nonsense. The retail industry lobbyists should be congratulated for their creativity–and perhaps nominated for some lobbying chutzpah award. And then sent away empty-handed.

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