Creative Quasi-Privatization

Tuesday, August 23, 2016

Priceonomics discusses (HT: GeekPress) how academic economists have helped the FCC auction off licenses to the radio spectrum, in the process reminding me of Ayn Rand's 1964 article on "The Property Status of Airwaves," in which she stated:

The history of the collectivization of radio and television demonstrates, in condensed form, in a kind of microcosm, the process and the causes of capitalism's destruction. It is an eloquent illustration of the fact that capitalism is perishing by the philosophical default of its alleged defenders.

Collectivists frequently cite the early years of radio as an example of the failure of free enterprise. In those years, when broadcasters had no property rights in radio, no legal protection or recourse, the airways were a chaotic no man's land where anyone could use any frequency he pleased and jam anyone else. Some professional broadcasters tried to divide their frequencies by private agreements, which they could not enforce on others; nor could they fight the interference of stray, maliciously mischievous amateurs. This state of affairs was used, then and now, to urge and justify government control of radio.

This is an instance of capitalism taking the blame for the evils of its enemies.

The chaos of the airways was an example, not of free enterprise, but of anarchy. It was caused, not by private property rights, but by their absence. It demonstrated why capitalism is incompatible with anarchism, why men do need a government and what is a government's proper function. What was needed was legality, not controls. (Capitalism: The Unknown Ideal, p. 125)
I think (but do not know) that the FCC is not actually selling, so much as retaining "ownership" and licensing out portions. Nevertheless, if this isn't ownership, it is at least a step closer to that ideal. It was interesting to read of the creative way the government found to assume (or at least move closer to) its proper role in this industry.

-- CAV


Anonymous said...

Hi Gus,

In the years prior to the 1920s - with the exception of the WWI years - something very like private property rights was evolving out of court cases involving tort claims for interference by newcomers in the signal of established radio transmitters. Most of the resolutions involved defining a right to broadcast on a certain frequency and within certain geographical limitations.

Herbert Hoover, whilst Secretary of Commerce, colluded with large corporations like RCA to create large numbers of court cases regarding 'interference' with the explicit goal of using that 'chaos and anarchy' to bring the airwaves under direct gov't control. Hoover, of course, was a Progressive Technocrat and thought that they should be 'owned by the public'. He was the first to use the 'friendly lawsuit' that we see practiced today by environmentalists under the aegis of the EPA in order to forward some statist agenda.

His creation of the narrative was so successful that not only did he gain the regulatory control he craved, but supplanted the historical facts with his own propaganda version.

I recommend the book below for the complete story and the parallels drawn by the author with the licensing of printing presses in England going back to Henry VIII; interested private parties colluded with Crown agents to eliminate the competition by force of law.

c andrew

Gus Van Horn said...


Thanks for the additional information, as well as the book recommendation.