Regulatory Strangulation
The Federal Communications Commission recently caused an uproar when it launched a “Critical Information Needs” study of the nation’s news broadcasters. The agency planned to interview editorial staff about how stories are selected, whether the stations might be biased in their news coverage, and how responsive they are to “underserved populations” in several categories of news that the FCC deems critical.
The FCC later dropped the study after one of its commissioners, Republican appointee Ajit Pai, criticized it in a Wall Street Journal op-ed as an effort to influence news coverage. Pai pointed out that the nation’s broadcasters would be hard pressed to ignore the FCC’s desires for fear of losing their broadcast licenses, so the study would have to end up influencing coverage. As he later said in an interview with the Daily Caller, this and other FCC efforts like it are motivated by a desire “to either directly or indirectly nudge . . . news coverage in a certain direction.”
Responding to the uproar, a writer in the Huffington Post points out that the FCC was just doing its job: “The FCC is tasked with making sure the broadcast media — via the limited broadcast spectrum which is owned by we, the people — serves the public interest.”
She’s right, but that’s exactly the problem.
In the early 1960s, in response to a similar effort by the FCC to require higher standards in children’s broadcasting, Ayn Rand wrote an essay called “Have Gun, Will Nudge” that addresses a fundamental problem with regulations. She points out that laws requiring anyone to serve the “public interest” have to end up replacing the rule of law with the rule of bureaucrats, because no one can know what the “public interest” means. What, for example, constitutes the “public’s interest” in news broadcasting? According to the Critical Information Needs study, it means more coverage of the environment and “economic opportunity,” among other categories. Who knows what any of these things mean or require? Ajit Pai points out that Fox News and MSNBC have their own views of what the public wants. But under the unknowable “public interest” standard, the only way to find out is to ask the FCC, which gets to impose its decisions by force. So much for freedom of speech in broadcast news.
You can read “Have Gun, Will Nudge” here. And if you’re interested in delving deeper into the issue of government ownership of the broadcast spectrum, be sure to check out Rand’s essay “The Property Status of Airwaves” in Capitalism: The Unknown Ideal.
The problem that Rand identifies in Have Gun, Will Nudge is by no means limited to the FCC. Virtually all regulations are based on nonobjective standards, meaning that businessmen must constantly defer to the judgment of bureaucrats. Will a drug company be able to recoup the enormous expenses of developing a new drug? Ask the FDA. Will developers be permitted to build on their land? Ask the EPA. Will companies be permitted to merge with others? Ask the FTC and the Justice Department.
For more on this, see my blog post, Chilling Commerce, Tom Bowden’s Creeping Tentacles of the Antitrust Octopus, Doug Altner’s post on Dodd-Frank, and Keith Lockitch’s op-ed on FDA control of stem cell therapy.
