KUHN CAPITAL Wednesday, March 21, 2018
Dispatches from the front

Regulators Dance on Head of Pin


Now comes news via the Los Angeles Times that Mike Powell, head of the FCC, has tasked his economists with developing a mathematical formula to settle – once and for all – what defines a sufficiently "diverse" media marketplace. The idea is to quash proposed business combinations that violate this diversity metric.

As quixotic as this FCC quest for a PC calculator may be, it points up more fundamental questions about a key department charter – to allocate media business opportunity based on somebody’s definition of what’s politically correct.

We have a modest counter-proposal: how about we let the market allocate resources according to what people want to watch or listen to, and are willing to pay for?

Don’t get us wrong. We think Powell is on the right track here. Whether intentionally or not, he’s performing a public service by illuminating the inner recesses of the FCC’s star chamber processes. The department’s long pursuit of correctness purity is littered with hugely expensive and poorly-structured spectrum auctions, the knighting of certified-correct millionaires, illegal “takings” of privately-owned property, TV broadcaster favoritism, burdensome regulations, and industry structural inefficiencies, all these things eventually expressing themselves the only way they know how – in your pocketbook. A far more productive use of FCC economists would be to calculate how many billions of dollars the department’s political agenda and micro-management have cost us all. And what about the salaries of all these FCC economists dancing on the head of the PC pin?

In today’s Los Angeles Times article, actor Richard Masur, a former Screen Actors Guild president, is quoted as saying, “This [diversity calculation] isn't something that can be figured out to the tenth of a decimal point. Explain to me how we can quantify something as subjective as diversity or quality.... An index is a fine idea, if you could do it, but one of the reasons we have a commission is so that the members exercise their judgment."

Precisely. How does one quantify a political process that allocates resources based on the shifting sands of what some commission considers correct at the moment, or on which commission member wields the most influence? These muddy decision-making conditions reliably lead to corruption.

Maybe the point of Powell’s diversity calculator is to begin the debate that leads the FCC out of its destructive role as Nanny-in-the-Sky and initiates the laborious task of dismantling its bloated bureaucracy. Soon technology will make the job of refereeing precious spectrum obsolete -- that is, if the regulators let it -- by using digital mechanisms that effectively expand wireless capacity to infinite dimensions. Spectrum wants to be free, and not a moment too soon.

Ryan Kuhn

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