Selected Skirmishes: Busy Work

How energetically government protects the public interest


In 1966, my good friend–and great American–Sol Schildhause was picked to head a cable television "task force" at the Federal Communications Commission. The creation of the task force was a consolation prize to the fledgling cable industry, which had just suffered a series of humiliating regulatory defeats with rules protecting TV broadcasters from their new rivals. Sol gladly accepted his assignment and scheduled proceedings to produce fact-finding about emerging coaxial technology.

Wrong move. Broadcaster lobbyists heard about Sol's efforts and descended upon the commission at warp speed. Hadn't they just crushed their cable foes fair and square with rules made officially in the "public interest"? Wasn't Sol's inquiry a rear-guard action to circumvent due process? A broadcast lobby tsunami engulfed the FCC.

Sol was bobbing in rough seas. Strolling down an FCC hallway, a commission member grabbed him solidly around the shoulders: "Sol, Sol, Sol. What the hell is going on over there at your Cable Bureau?" Sol, responding proudly, boasted: "Well, we're doing some very good things. Finding out a lot of interesting stuff about the new communications…."

At which point the commissioner cut in: "Dammit, Sol. You're supposed to look busy, not be busy."

The episode illustrates the gap between the glossy public perception and the tacky private reality of what is called "the regulation of business." The businesses we purport to regulate often end up regulating us, securing a far more faithful customer base through federal enforcement than they could ever amass through the cold play of market competition.

But, of course, evil corporate villains can't play this game alone. The captains of industry know something about marketing, and "Monopoly Profits for Rich White Guys!" just ain't zippy on a bumper sticker. So they contract out, enlisting a skilled political sales team to devise a public relations angle. The most successful in this business have a magical ability to convince Joe Sixpack that he is the very lucky beneficiary of policies that cost him plenty and deliver him bupkis.

But, alas, politicians do not come cheaply. They are typically unruly employees, given to repeated holdouts, forever whining about working conditions and pestering their patrons for a raise in pay. Take that quintessential regulatory craftsman, President Richard M. Nixon. Thanks to some recently released audio tapes, we may now calibrate his estimate of the market price for a favorable regulatory ruling in the TV network sector.

To obtain his compensation package (which included prime-time coverage of Tricia Nixon's Rose Garden wedding), Nixon personally ordered that a Justice Department antitrust suit be delayed to create anticipatory incentives for network executives. "If the threat of screwing them is going to help us more with their programming than [filing suit], then keep the threat," our president told aides in 1971. "Don't screw them now, [otherwise] they'll figure that we're done." Adviser Chuck Colson, who now runs his own prison ministry, readily agreed: "Keeping this case in a pending status gives us one hell of a club on an economic issue that means a great deal to those three networks…something of a sword of Damocles."

To clarify any lingering doubts as to the basic premise of government regulation, Nixon elaborated for the historical record: "Our gain is more important than the economic gain. We don't give a goddam about the economic gain. Our game here is solely political….As far as screwing them is concerned, I'm very glad to do it."

Irony: The broadcasters–having used the FCC to twist their own screws into upstart cable rivals–were now getting drilled by the very handymen they had hired. Talk about not being able to find good help. Nowhere is this truer than in Washington, D.C., where civil servants may be not at all servile.

Excepting, of course, that little man Al Gore. Our vice president totally cares about promoting ecology and would always choose to do the green thing. This the public knows. Which makes his fee for P.R. work on behalf of industrial polluters surprisingly affordable.

Consider the heavy lifting he did on behalf of Champion International, a company whose paper mill in Canton, North Carolina, has used the Pigeon River as a septic tank for some 90 years. Today the estuary features, in Newsweek's description, "a coffee-colored brew of industrial pollutants that, on a good day, smells like rotten eggs." But in 1987, when the Environmental Protection Agency proposed beefing up water quality, then-Sen., and presidential candidate, Gore went to bat for Champion.

With an eagle eye on the North Carolina primary, Gore begged the EPA to back off, noting his "regret" as to any confusion regarding his previous–and still public–stance in favor of tough laws to clean up the Pigeon River. The political tat for Al's tit was backing from Champion, Democratic Party endorsements in the Tarheel State–and an easy win on election day.

Somehow the extortions of the Nixons and the extractions of the Gores do no harm to the government regulation of business, a practice which remains popular among the masses and staunchly defended by the elites. Then again, when government is seen from a distance, I can sort of understand this attitude. After all, everyone looks busy.

Contributing Editor Thomas W. Hazlett (hazlett@primal.ucdavis.edu) teaches economics and public policy at the University of California at Davis.