Policy

Ronald Coase vs. the Broadcast Monopolists

The late economist made the case against the FCC and similar regulatory bodies.

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I will leave it to others here to discuss the broader importance of the late Ronald Coase—the Coase theorem, his theory of the firm, and so on. I just want to note how important he was in undermining the ideas invoked when governments seize control of the electromagnetic spectrum and then either monopolize it for themselves or license it to a select group of privileged partners. Coase was one of the first economists to argue that markets rather than planners could allocate access to the spectrum. It would be an understatement to say that this was not the conventional wisdom at the time: Invited to present his ideas to the Federal Communications Commission in 1959, the first question Coase received was, "Tell us, Professor, is this all a big joke?"

Coase's work in this area began in his native U.K., with the research that culminated in the book British Broadcasting: A Study in Monopoly, and it continued in the U.S., with his famous paper on the FCC and a less-famous but still worthy follow-up on the Interdepartmental Radio Advisory Committee. His other articles touched fairly frequently on broadcast regulation, including a contrarian take on payola.

When I wrote Rebels on the Air: An Alternative History of Radio in America, one of my aims was to bring together two streams of social criticism: the economists, mostly free-marketeers, who had made the case against the necessity of spectral central planning; and the historians, mostly leftists, who had explored the ways the government had favored large corporate broadcasters at the expense of other models. Coase was the granddaddy of the first group, and even in the areas where subsequent research has supplanted his proposals he made an enormous contribution. Anyone eager to loosen the shackles of the FCC owes him a great debt.