Tag Archives: monopoly

Spin Cycle

Tom Wheeler was Chair of the Federal Communications Commission from 2013 to 2017. In the wake of Sinclair Broadcasting’s application to acquire Tribune Media, he wrote a very troubling article for the Guardian. 

It is a major decision, since the resulting broadcast behemoth would hold as many as 233 local television stations reaching into more than 70 percent of American homes. Allegations about the Trump administration’s closeness to Sinclair – including Jared Kushner’s campaign deal with them – have been made. All I know is what I read, but the lead up to the actual decision has been significant and seems to presage approval.

Wheeler has previously warned that Trump’s FCC has been strategically knocking down all the regulatory barriers that have kept Sinclair Broadcasting from becoming a national Goliath.

First, the FCC changed the rules so that some stations are counted at only half their reach – using funny math to comply with Congress’ mandate that no single broadcaster should control access to more than 39 percent of American households. Then, the FCC proposed eliminating the requirement that each licensee maintain a local studio, doing away with the concept that broadcasters perform an important public service by delivering local news and information over the people’s airwaves. Finally, the commission eliminated the prohibition on a favorite trick of slick lawyers: that total management control and appropriation of profits of a television station doesn’t constitute effective ownership, and thus avoids Congress’ cap.

The rules that the current FCC Chair has changed or evaded were intended to protect a broadcasting marketplace of ideas–to prevent any one voice from effectively drowning out other voices, other perspectives, in a community.

Proponents of these sorts of rule changes and mega-mergers argue that the internet, social media and things like satellite radio provide adequate diversity of opinion. Perhaps, when those constantly morphing mediums have “settled in” and become routine touchstones in the cultural landscape (if that ever happens), that argument might carry some weight. At this point in our constantly-morphing media landscape, however, allowing Sinclair–or any one outlet–to dominate the airwaves would be like giving Fox or MSNBC control of all but a few cable news channels.

The current chair of the FCC has already signaled his agenda by trying to reverse the rules protecting Net Neutrality. 

This rule-changing at the FCC illustrates one of the most dangerous aspects of the Trump Administration. We all worry about having a mentally-ill President’s finger on the nuclear button, but very few of us know about–or pay attention to–obscure and technocratic rule changes, the sorts of sabotage that Scott Pruitt is engaging in at the EPA. While decent citizens react negatively to Trump’s embrace of the KKK, et al, most of us don’t even see what is happening in more boring regulatory precincts.

For that matter, most of us were unaware of Sinclair’s determinedly rightwing political agenda until John Oliver’s recent, scathing take-down.

As the French philosopher Jacques Ellul once warned,  the emergence of mass media made possible the use of propaganda techniques on a societal scale. Monopolies in the markets for goods are bad enough; allowing any perspective to monopolize the marketplace of ideas is infinitely worse.

What Teddy Roosevelt Understood That We Don’t

Back when Republicans were responsible stewards of the public good, Teddy Roosevelt waged war on monopolies. He understood that the virtues of capitalism–and they are many–required government protection. American commerce was no longer characterized by small merchants and farmers competing on a more-or-less equal playing field, and that made it imperative to constrain the powerful from dominating the marketplace and squeezing out the little guys.

In a recent column, Nobel prize winning economist Joseph Stiglitz points out that the problem of monopoly power is still with us, and still an enormous impediment to the proper working of a market economy:

In today’s economy, many sectors – telecoms, cable TV, digital branches from social media to Internet search, health insurance, pharmaceuticals, agro-business, and many more – cannot be understood through the lens of competition. In these sectors, what competition exists is oligopolistic, not the “pure” competition depicted in textbooks….

US President Barack Obama’s Council of Economic Advisers, led by Jason Furman, has attempted to tally the extent of the increase in market concentration and some of its implications. In most industries, according to the CEA, standard metrics show large – and in some cases, dramatic – increases in market concentration. The top ten banks’ share of the deposit market, for example, increased from about 20% to 50% in just 30 years, from 1980 to 2010.

Some of the increase in market power is the result of changes in technology and economic structure: consider network economies and the growth of locally provided service-sector industries. Some is because firms – Microsoft and drug companies are good examples – have learned better how to erect and maintain entry barriers, often assisted by conservative political forces that justify lax anti-trust enforcement and the failure to limit market power on the grounds that markets are “naturally” competitive. And some of it reflects the naked abuse and leveraging of market power through the political process: Large banks, for example, lobbied the US Congress to amend or repeal legislation separating commercial banking from other areas of finance.

Bottom line lesson: government should be an “umpire,” ensuring a level playing field, rather than a member of the “team” that has most effectively used its greater resources to game the system and co-opt the process.

As Stiglitz notes, unequal distribution of power in the marketplace drives inequality and undermines democratic institutions. It’s hard to disagree with his conclusion:

If markets are fundamentally efficient and fair, there is little that even the best of governments could do to improve matters. But if markets are based on exploitation, the rationale for laissez-faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.