Why both the Left & Right love media regulation

by on April 28, 2008 · 6 comments

Bruce Owen, America’s preeminent media economist–with apologies to Harold Vogel, who at least deserves an honorable mention–has written another splendid piece for Cato’s Regulation magazine, this one entitled, “The Temptation of Media Regulation.”

This latest essay deals primarily with the many fallacies surrounding so-called “a la carte” regulation of the video marketplace, and I encourage you to read it to see Owen’s powerful refutation of the twisted logic behind that regulatory crusade. But I wanted to highlight a different point that Bruce makes right up front in his essay because it is something I am always stressing in my work too.

In some of my past work on free speech and media marketplace regulation, I have argued that there is very little difference between Republicans and Democrats when it comes to these issues. They are birds of feather who often work closely together to regulate speech and media. Whether it is broadcast ‘indecency’ controls; proposals to extend those controls to cable & satellite TV; campaign finance laws; efforts to limit or rollback ownership regulations; or even must carry and a la carte, the story is always the same: It’s one big bipartisan regulatory love fest. [And the same goes for regulation of the Internet, social networking sites, and video games.]

Owen explains why that is the case:
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Cartesian Theater

by on April 14, 2008 · 22 comments

Tom doesn’t elaborate on why the topic of free makes him angry, but I think the gloss on this article—you might have no free will because your brain makes decisions before you’re aware of them!—is pretty stupid. Obviously, if your brain is the organ that you use to make decisions, you would expect your brain to be engaged in certain kinds of activity before any given decision is made. And obviously if you observed this activity closely enough, you’d find that the process takes a finite amount of time. And obviously you wouldn’t be able to report that the process had completed until it had, in fact, completed. But this doesn’t mean that “your subconscious” is forcing you to do something outside of “your” control. That brain activity was just part of the decision-making process you went through to reach the decision.

As Daniel Dennett has pointed out, the idea that this experiment is creepy comes from what he refers to as the theory of the Cartesian theater: the idea that “you” are really a metaphorical guy sitting at a little control panel inside your brain, telling your brain what to do. Dennett suggests that a lot of people have this view as their implicit model of how the brain works. Hence, people assume that “you” should be able to direct your brain’s decision-making process, which makes it creepy when the brain does something without “your” controlling it. But if examined closely, the notion of a Cartesian Theater doesn’t make a lot of sense. Among other problems, it suffers from the problem of infinite regress: if you’re really a little guy at the control panel of your brain, who’s controlling the little guy? Ultimately, if you want a materialist explanation for human cognition, it’s inevitable that you’ll wind up conceiving human consciousness as an emergent property of the physical system called the brain. And if you’re not interested in a materialist explanation for cognition, then why do you care what a bunch of neuroscientists have to say?

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Online Sales Tax Cartel?

by on February 25, 2008 · 6 comments

I hate to disagree with my friend Larry Magid, a technology analyst for CBS News, who writes this week in favor of a uniform online sales tax regime. Magid says he “can’t think of any good reason why customers of online retailers should shop tax-free while people who spend their money locally have to pay sales tax.” Well, I’ve got a couple of good reasons, Larry.

Back in 2003, Veronique de Rugy [now of the Mercatus Center] and I penned a lengthy Cato Institute white paper on this issue entitled, “The Internet Tax Solution: Tax Competition, Not Tax Collusion.” In that study, we addressed the arguments in favor of the so-called Streamlined Sales Tax Project (SSTP) and noted that a move toward more simplified tax regimes was certain laudable. In reality, however, the effort by states to build a “uniform” sales tax regime for online sales was less about achieving simplicity and more about raising taxes and imposing tax collection burdens on interstate commerce. Veronique and I pointed out that this created both economic and constitutional concerns since the SSTP was tantamount to a state-run sales tax cartel:

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Deregulation Used to Be a Liberal Idea

by on February 25, 2008 · 6 comments

One of my favorite things about Matt Yglesias’s blog is that he’s considerably better-informed than his commenters, and is willing to say things that he knows perfectly well will piss them off. The latest example is a post where Matt opines that “the movement, started under Jimmy Carter then of course continued by Ronald Reagan and Bill Clinton, to deregulate important aspects of the American economy was basically a good thing.” This provokes almost unanimous condemnation from Matt’s readers. But Matt’s right.

I think it’s amazing how many commenters here appear to have absolutely no knowledge of the nature of a lot of regulations in the 1970s and before. I’m not talking about meat inspections or environmental laws here, but the regulation of trucking, airlines, telecommunications, securities, and a number of other industries were thinly veiled attempts to create government-supported monopolies for the benefit of incumbent businesses. The ICC, for example, which regulated surface transportation, carefully controlled which trucking companies could drive which routes. They routinely denied applications to provide new service on the grounds that the route in question already had “enough” competition. The result, not surprisingly, was that prices were significantly higher than they would be in a competitive market. Airlines were the same way. The CAB actively prevented the airlines from cutting prices or expanding service. And until the early 1970s, the FCC actively worked to prevent competition in the long-distance market to keep AT&T’s profits up.

Not only did consumers get screwed from higher prices, but this created a lot of waste too. Trucks would commonly drive from one city to another, and then drive back empty because they couldn’t get permission to carry cargo on the return trip. In the 1960s, airplanes were almost half empty, on average, because they weren’t allowed to cut prices in order to attract more passengers.

Airline, trucking, and long distance deregulation were a win from just about every ideological perspective. It was good for consumers (especially low-income consumers), free markets, and economic efficiency. The major losers were incumbent businesses who no longer enjoyed monopoly profits. It’s a rare example in which elite opinion across the political spectrum converged on a set of changes that benefitted almost everyone in society.

A final thing to note is that these policies were championed by liberal Democrats. The key players were Jimmy Carter, Ted Kennedy, and Stephen Breyer, who worked for Kennedy in the 70s. This was a great triumph of liberal intellectuals over corporate interests. Yet a generation later, the smart lefties who read Matt’s blog seem to be completely oblivious to what was probably Jimmy Carter’s most important domestic policy accomplishment.

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Big Business vs. Regulation

by on February 4, 2008 · 6 comments

Quote of the Day:

Charles Francis Adams, Jr., then director, and soon to become president of the Union Pacific… revealed to Long on March 1 why railroads were soon [in 1884] to bring all their weight behind the commission form of regulation. Indeed, he suggested the whole course of subsequent big business attitudes toward federal regulation: “If you only get an efficient Board of Commissioners, they could work out of it whatever was necessary. No matter what sort of bill you have, everything depends upon the men who, so to speak, are inside of it, and who are to make it work. In the hands of the right men, any bill would produce the desired results.”

Three years later, Congress created the Interstate Commerce Commission, which just as Adams had hoped, gradually transformed the railroad industry into a government-run cartel, reversing the rapidly-falling rates of the pre-regulation period.

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Jesse Jackson: Kevin Martin Is Too Regulatory

by on November 21, 2007 · 0 comments

The casual observer can be excused for being a bit confused by the on-going cable imbroglio at the FCC. Throw away your old-fashioned ideological assumptions about who should line up where — the players on this one have been as jumbled as a flight schedule on a holiday weekend. A Republican chairman of the FCC, with support from leftish activist groups and AT&T, is pushing for massive regulation. He is being challenged by fellow Republicans on the commission, as well as Republicans in Congress. Now comes one more voice against new cable regulation: Jesse Jackson’s.

That’s right. Jesse Jackson, the founder of the Rainbow Coalition, thinks FCC Chairman Kevin Martin is going too far:

“There is virtually no political support from either progressives or conservatives for such pet policies as a la carte pricing, which would raise prices for consumers and hurt most programmers, or for the various ‘leased-access’ programs that will squeeze out channel space for minority-owned programmers,” Jackson said in comments earlier this week.

“Rather than work through the democratic process in Congress, a bureaucratic agency should not be using a 20-year-old-legal clause to implement wholesale policy changes that hurt consumers and hurt minority television programmers.”

And he’s right. Despite the rhetoric, regulation isn’t the friend of diversity — it more often suppresses it than fosters it.

Welcome to the deregulatory coalition, Rev. Jackson. You can sit over there, where Mr. Martin used to sit.

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French Carterphone may halt L’iPhone

by on October 9, 2007 · 14 comments

french-carterfone.jpgI love my iPhone. Despite what others might say, it is the most innovative mobile phone in a decade. I also think innovators should be rewarded, which is why I’m fine with the iPhone being locked to AT&T’s network. As a result, Apple gets a cut of my (and every other iPhone owner’s) wireless bill.

France might be left behind when it comes to this innovation, however. That country has laws similar to the wireless Carterfone rules Tim Wu, Skype, and others have advocated for the U.S. Locked phones in France must be unlocked by the carrier upon user request, and wireless carriers must also sell unlocked versions of their mobile phones. As a result, Apple is considering keeping the iPhones off French shelves indefinitely.

To me it’s clear that forced access laws limit innovation. I think folks who propose such rules want to have their cake and eat it, too. That is, they want the innovation that comes from entrepreneurs acting in a free market (and often fueled by exclusive deals such as the one between Apple and AT&T), and they also want the forced openness of networks. They think that the latter will have no impact on the former; that innovators will innovate regardless of the incentives. The iPhone snag in France, however, shows that incentives do matter.

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Golan and Enumerated Powers

by on September 6, 2007 · 10 comments

I think the Golan decision is a good thing from a policy perspective, given how hard the copyright cartel has worked to keep anything from ever falling into the public domain. However, I share Joe’s puzzlement about exactly how the First Amendment is relevant:

The Tenth Circuit remanded the case to the district court. Its instructions on remand are a little curious. It asks the district court to determine whether the URAA is a content-based or a content-neutral restriction on speech. I’m not sure why, for two reasons. First, whether a law is content-based or content-neutral ought to be a pure question of law; there aren’t any facts to find, so I’m not sure why the district court gets first crack. Second, I can’t imagine a way to find that any copyright law is content-neutral. If I stand on a soapbox in the middle of town and recite a certain poem that begins “Shall I compare thee to a summer’s day?,” the law does not punish me. If I stand on the same soapbox and recite — at the same volume, in the same tone of voice — a different poem that begins “Oh baby baby, how was I supposed to know?,” the law punishes me. That’s the very definition of a content-based restriction. We’ll see what the district court does.

It seems to me that if the courts find a particular grant of copyright exceeds Congress’s power under the Progress Clause, that, in and of itself, should be sufficient to declare the law in question unconstitutional. Otherwise, why would the framers have gone to the trouble of specifying the precise limits of Congress’s powers to grant patents and copyrights?

Perhaps the legal theory here is that Congress has the power to do whatever it likes unless it runs afoul of a right enumerated in the Bill of Rights, but that, if a Congressional action falls within the scope of the Progress Clause, then it’s constitutional even if it runs afoul of the Bill of Rights. That seems bass-ackwards to me, but of course, I was equally perplexed when the Supreme Court decided that growing pot in your backyard for personal use is “interstate commerce.”

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Laurence Tribe on the First Amendment & Technological Change

by on August 23, 2007 · 0 comments

Progress & Freedom Foundation hosted its 13th annual “Aspen Summit” this week and, as always, it featured some of the leading thinkers in the field of technology and media policy. This year, we were also lucky enough to be joined by one of America’s leading constitutional scholars, Prof. Laurence H. Tribe of Harvard University Law School.

I invited Prof. Tribe to Aspen to deliver a keynote address on the future of the First Amendment in an age of rapid technological change and media convergence. It was an amazing speech and I thought I would share a few highlights from his address with you here. I hope to transcribe the complete address and publish it sometime soon. [Update 8/27: The video is now online.]

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The Webcasting Cartel

by on August 3, 2007 · 0 comments

Mike Masnick points to this excellent post on Jon Healy’s blog at the Los Angeles Times. According to Live365, RIAA music accounts for less than half of all music webcast.

The problem is that, as Jamie Plummer explained in an issue of TechKnowledge a couple of months ago, every artist and every Internet radio station has to participate in the RIAA’s cartel collection agency, SoundExchange, whether they want to or not. As I understand it, artists are not permitted to sign separate contracts setting lower webcasting rates for their music, nor are artists allowed to give blanket permission to play their music for free.

This is a classic example of industry incumbents using the legal system to maintain artificially high prices. In a free market, lesser-known artists would offer webcasters discounts in the hopes of getting more play time. That, in turn, would put pressure on the majors’ royalty rates, as more webcasters shifted to playing less expensive music. But thankfully, Uncle Sam has stepped in and rescued them. Like the ICC of old, SoundExchange legally prohibits artists from charging unfairly low prices, ensuring that the labels don’t face unfair competition.

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