A Few Words Archives - Half Formed Thoughts 06/11/03

Rich Media, Poor Logic, Pt. 1

Recently I was visiting my friend Dave. We have known each other for just over ten years, and as such know each other well enough to say whatever we want to each other without fear of misunderstanding. One of the issues about which Dave feels very strongly is the increasing power of the powerful media companies, and the perceived negative impact their actions have on US culture and politics. And while it is obviously true that in the past ten years we have seen the dominant media companies become larger than ever, I do not agree with the conclusion that their growth has been harmful to society, and I certainly do not agree that increased government of the media/entertainment industry would make the situation any better.

We argued for quite a while, until he got frustrated that I just wasn’t seeing things the same way he does. Before I left, he gave me a book to read, titled “Rich Media, Poor Democracy” by Robert W. McChesney. I told him I’d be happy to read it and let him know if anything he had written makes sense to me. I just finished the first chapter and already I have several comments and observations to make, but before I begin it would probably be helpful if made a few of my basic principles perfectly clear.

I am a libertarian. In a nutshell, what that means is that I value human freedom. I believe that all people should be as free as possible to live their lives in whatever way they desire, so long as the exercise of those freedoms does not infringe upon anyone else’s freedoms. I hold these principles both on the social and economic level. Any system of philosophy must begin with a base set of principles which are accepted as evidently true without proof, and these are mine.

I view all issues through this prism, and therefore my default position toward any political, economic, or social issue is towards individual freedom of choice. Just as citizens accused of crimes are presumed innocent until proven guilty by a preponderance of the evidence, I believe that all actions should be presumed legal unless it can be shown that there is a clear and demonstrable benefit for passing a law against it. I believe in the absolute minimum government necessary to ensure that individual freedoms are protected.

Furthermore, I believe that individual freedom is not only the optimal arrangement for individuals, but I believe that it is the optimal arrangement for society as a whole. A large, wasteful government does not serve its citizens best, but is nothing more than a monster to be controlled by those who want something from it.

I am almost always in favor of deregulation of markets, because I have more faith in the free market to serve the people’s interest than I do in central government planning to do the same. I thought that the lessons the world learned in the twentieth century would lead to a twenty-first century devoid of misguided faith in socialism. I am a disciple of Adam Smith, and I believe in the Invisible Hand. I believe in individual responsibility, and I do not want any government or anyone else to tell me how I should act in my own best interest.

I could go on and on, but if you’re already familiar with libertarianism I’m boring you to death and if you’re not familiar with libertarianism I’m not the most qualified to teach you. Go study some economics. Read a book or two by Ayn Rand. I’ll now skip to my thoughts on chapter one of McChesney’s book.

Chapter One : US Media at the Dawn of the Twenty-first Century

Before we even get to the first chapter, we have the introduction, an almost arrogant show of lack of logic. The author states that as media companies have grown larger, participation in politics (as defined by the single statistic of voter turnout) has gone down. As his bone to pick is with these large media corporations, it is assumed that there is cause and effect here, when so much else has changed about our world that finding a single cause for any long-term change in anything is impossible. But not for Mr. McChesney, of course.

He also displays a stunning lack of knowledge about how our country’s government works. He throws around the term “democracy” about a hundred times and points to the fact that our democracy isn’t healthy. However, we do not live in a democracy. We live in a representative republic in which we do not vote directly for laws, but we elect representatives to vote, hopefully, on our behalf. If our leaders do not act on our behalf, we have the freedom to vote in different representatives. Our country has never been democratic, and given its size, never will be.

Now on to the first chapter. A quick history of media companies shows that in the beginning, the size of media corporations was highly regulated. A single person or corporation could only own so many newspapers, radio or TV stations, etcetera. Over time, these regulations have been relaxed, allowing larger companies, and to no one’s surprise, media corporations have become huge corporate behemoths. He shows several examples of the synergies companies have received from their size, including the now pervasive practice of cross-promoting movies, TV shows, and merchandising tie-ins.

But what he fails to show is why the laws limiting media ownership were needed and/or good in the first place. As I stated, I have faith in free markets with only a few exceptions. In instances where I acknowledge the need for government regulation, I can point to economic arguments showing specific reasons why the free market cannot function. For example, police protection. A private police industry could never be profitable because there is no quick easy way for a police officer to determine if a potential victim is up to date on his police bill. Also, the primary benefit of police protection is its deterring effect, preventing potential criminals through fear of getting caught. Therefore a person who pays nothing to the police will receive almost the same protection as a person who pays his fair share, and therefore only a fool would voluntarily pay. This is known in economics as the “free rider” problem.

But back to the media corporations. In order to say that the deregulation of media companies is bad, you must first show why the arbitrary size limits were good in the first place. McChesney simply expects us to accept without question that smaller companies are better than large companies.

He loves to thrown around words like “oligopoly” and “conglomeration” as if these things are obviously bad. But large corporations have advantages due to economy of scale. This is why millions of people every day shop at Wal-mart. They have goods people want to buy at prices lower than their competition. I’ll bet you a thousand dollars that Robert McChesney does not shop at Wal-mart.

But there is something fundamentally different about the media industry than virtually any other industry in the world, and it is a difference which the author gives no accounting for. It has to with the concept of marginal cost vs. fixed cost. Marginal cost is defined as the amount of money it costs to produce one more widget, or whatever the company produces. In the auto industry, fixed costs are things like the cost of building factories, and the engineering required to design the latest cars. The marginal costs are the labor and parts required to build each car. In the case of the auto industry, most of the costs are marginal. Even after a thousand cars have been built, it still costs a lot to produce one more car.

In the media industry, almost all of the costs are fixed. Once a newspaper has been written and readied for press, it costs almost nothing to produce each individual newspaper. It costs less than a dollar to print a hardcover book. A quick stroll through Best Buy reveals that a blank CD doesn’t cost anywhere near $15. Once Disneyland opens its gates for the day, the marginal cost caused by each new person who enters the park is, for all practical purposes, zero. One person isn’t going to cause any extra expense; he’ll just make a few of the lines one person longer.

What does this mean for the economics of media companies? It means that even if every single media company in the world merged into one giant mega corporation, AOLTimeWarnerDisneyVirginSeagramUniversalWarnerBrothers would still not enjoy the same pricing power as other monopolies. He himself observes in the introduction that overall media consumption increased 13 percent between 1995 and 1998. This is not what economic theory predicts occurs in industries which experience reduced competitive forces. This shows me that the companies have gotten much better at providing the public with entertainment. I think this is a good thing, not a bad thing.

The downside to this centralized power in the media industry, as McChesney sees it, is that the incentive to take creative risks gets reduced, and entertainment becomes more and more bland, where every new musical artist sounds just like twelve other popular artists. I won’t deny that this takes place. However, I am also not an elitist enough to say that this is obviously a bad thing. The truth is that the people who vote with their pocketbooks seem to prefer cookie cutter music as made by Nsync, Britney Spears, and Creed.

But I counter with two points. One, there have always been minimally talented pop music artists getting by on their looks and other people’s songwriting. Is there any substantive difference between the Backstreet Boys and the Four Tops? Two, inventive music will continue to be made. You see, the people who are primarily concerned with making the best music are, by definition, not primarily motivated by money. And there will always be enough quality-seeking consumers that the truly talented artists will always exist. You may have to look harder for them, but as one of those truly talented quality-driven individuals once so famously observed, “Same as it ever was”

He gives as another example the decline in popularity of foreign films in the US. He believes that the cause of this is the proliferation of huge cinema multiplexes which squeezed out smaller theaters which showed these films. He writes the following, which might be the most wrong thing in the entire chapter: “By the logic of the ‘give the people what they want’ thesis, this development would reflect the fact that the American people were no longer interested in seeing non-U.S. films. But it was nothing like that at all. Instead, what was reflected was the rise to dominance in the United States of the chain-owned megaplex movie theaters.”

How is that statement wrong? Let me count the ways. Two firms which produce different goods cannot drive each other out of business. If there were a strong demand for foreign films, the theaters which showcased them would not have gone out of business. And, in fact, many small theaters do continue to exist in places where there is demand for foreign films. Pick up any big-city newspaper and you’ll find advertisements for plenty of films from France, Brazil, Spain, and Italy. The simple truth, which Robert can’t seem to accept, is that most Amercians really do prefer Jim Carrey and Julia Roberts to that goofy guy from Life is Beautiful. If some Russian director started making movies that appealed to millions of Americans, you can bet your ass that General Amusements and Lowes would put it on thousands of their screens before you could say “sacre bleu!”

The people do get what they want, and the problem that liberals like McChesney have is that they can’t accept that most people want complete tripe, and more and more of it.

This is already way too long, so let’s touch on two more areas. First, journalism. Huge corporations having influence over news reporting obviously gives them great power to influence public opinion. Just recently I heard a report that every single newspaper owned by Rupert Murdoch ran editorials supporting the war in Iraq. It stands to reason that such newspapers are not going to be unbiased and present viewpoints counter to the war machine, and it’s not likely that our continued inability to find any weapons of mass destruction is going to be a front page story any time soon.

But again, I fall back on the fact that the people are getting exactly the media coverage that they want, and are therefore getting exactly the government that they deserve. News organizations are in business to make money, and they do so by getting the highest ratings. It turns out that people are more interested in Chandra Levy and Laci Peterson than in the inner workings of our government. Far more people followed with great interest the story about Bill Clinton’s blowjob than followed his push for universal health care coverage. This is sad, but true. We might agree that this is bad for democracy, but I concede that this is human nature and will not change no matter how many different people own TV stations. Do you know anybody who watches C-SPAN on a regular basis? Neither do I.

The bottom line is that anyone who forms his political opinions based on who or what a certain newspaper endorses is the kind of person who already has little desire to deeply understand political issues.

Finally, let me say a little bit about public broadcasting and children’s television. The author goes into quite a bit of detail about how the rules regarding educational television have changed. In the first place, I don’t expect television to educate my children. When television was first invented, many idealists imagined the educational possibilities of this new medium. For the life of me, I can’t understand why anyone still clings to this belief in a world where The Osbournes can become the most popular TV show. Television is a medium which primarily entertains, and it is the McDonald’s of entertainment. People want to turn on a TV and watch something which requires as little effort on their part as possible.

That being said, some good educational programming has been made, and perhaps the greatest children’s show of all time, Sesame Street, has been made by public television. I’ll give you that. But I have young children myself, and I know what the current state of children’s television is, and without a doubt the best educational show within the past five years is Blue’s Clues, shown on Nickelodeon, a private network. What has public television produced lately? Complete and utter shit like Barney, Arthur and the Teletubbies. These three shows have absolutely no educational content, and they exists for the sole purpose of pushing licensed merchandise upon children whose parents somehow feel the need to buy their love. There is no substantive difference between these shows and Pokemon or Transformers. Public television is no guarantee of good, wholesome children’s entertainment.

So, to close this quick rebuttal, let me say that I love the media industry as it is presently configured. Sure, it produces tons of garbage, but people love garbage. People who don’t like garbage will have to look harder for the good stuff, but this is true of everything in life. The difference between liberalism and libertarianism is that I respect the rights of people to make choices I find incredibly stupid, so long as they don’t hurt anyone else. And I further have no expectations that anyone else is obligated to produce anything for me which I have not earned. If I have money to spend, I will spend it on what I like best, and in such a system companies will strive to produce more of what I like best. And this is even truer of the entertainment industry than other industries because almost all spending on media is discretionary. If every car company started making cars that I hated, I’d still need a car and would be forced to buy the car I hated least. But if movie studios produced a whole slew of movies which looked uninteresting to me, I wouldn’t go see any movies. Same thing with music and TV. So it is that even with near-monopoly power, the entertainment companies will always be responsive to the needs of the customer, and any government intervention in or regulation of the industry is unneeded.

In a democracy, people vote for their leaders. But capitalism is a sort of democracy as well, in which people vote with their pocketbooks. And I believe therefore, that any unneeded government regulation in private industry is itself undemocratic, and Un-American.

Dave, perhaps you still feel that we have too divergent points of view to rationally discuss this issue, but I hope not. I look forward to your thoughtful response, and the thoughtful response of anyone else for that matter.

Email Steve with any comments at aenor@aurora.mv.com