Free Markets In Action

Even when it isn’t election season in the United States, there’s a lot of noise made about “the free market” and “entrepreneurialism.”  Government, goes the refrain, simply needs to stand back to let the alchemy of capitalism proceed.  Already, the new year has disclosed two small but revealing news items that clarify the actual – contrary – reality.

The first concerns driverless cars.  Much ballyhooed, the major story has been whether the transition to software-powered vehicles will be shepherded by the big automakers – or by Silicon Valley.  The news peg, as we all have learned, is “disruption”: the competitive market in action.

Not so fast.  Consider recent disclosures that the U.S. Government will “expedite regulatory guidelines for autonomous vehicles and invest in research to help bring them to market.” The Obama Administration, it turns out, has pledged no less than $4 billion in its proposed budget for the next fiscal year, “to fund research projects and infrastructure improvements tied to driverless cars.”[i]  The relationship between government regulators and corporate carmakers is aptly described as “cooperative” – including with regard to vehicle safety as the National Highway Traffic Safety Administration (NHTSA) is ready to exempt carmakers from safety standards.[ii] Are driverless cars the answer to the environmental despoliation caused by automobiles?  An open-ended and inclusive public deliberation could give us the answer.  We won’t get it.  The objective of the Obama budget item is already taken for granted:  “to accelerate the acceptance of driverless cars on U.S. roads.”[iii]

Four billion dollars isn’t what it was; still, it’s a sum that would suffice to fund a lot of college scholarships for students from poor families – 49 million people are struggling to have enough food to eat in the US according to a report from the U.S. Department of Agriculture.[iv] But the government trough remains full, instead, for the big units of corporate capital – the ones whose executives so often pontificate about free markets and the evils of big-government.

Here’s another tidbit that imparts a comparable lesson.  It turns out that billionaire Michael Dell – of the eponymous PC company – has drawn on his investment fund to purchase a dozen or so mostly small U.S. television stations since 2011. Is Dell’s purpose to enter the broadcast market, and to innovate in ways that lead to further profitable success?  Not exactly.  His investment is based on his knowledge that the airwaves – the electromagnetic frequencies – used by these small broadcasters are going to be auctioned by the U.S. Federal Communications Commission later this year – bought, and then resold to big wireless operators like AT&T.

Dell acquired this whole lot of TV station frequencies for $80 million; he might be able to resell them to the government for as much as several billion dollars.  The several stations he acquired in Pittsburgh, for example, might garner as much as $1.47 billion; the $8 million he spent on KTLN in San Rafael California might win him as much as $370.5 million from the FCC.  And, the Wall Street Journal imparts, Dell “isn’t the only spectrum speculator.”  As might be predicted, likeminded predators hail from what is euphemistically referred to as the investor community: Fortress Investment Group and the infamous Blackstone Group in particular.[v]

Why couldn’t the airwaves simply be reclaimed by the government – what we so often term “our” government?  After all, despite storms of popular protest, they were preferentially allocated to commercial broadcasters without charge.[vi]  A fair reimbursement would be Dell’s purchase price for each station. This option, however, is not deemed worthy of discussion in mainstream policy discourse. Also off-limits is that the natural resource on which broadcasting, mobile telecommunications, and satellites each depend, the electromagnetic spectrum, is being transformed into a proprietary good rather than a public resource.  Is this its best use?

Often, inequality is characterized as a condition that is inexorable.  Some are rich, some are poor:  it’s always been so.  In fact, inequality is continually extended and enlarged via routine political-economic mechanisms.  The state plays an essential role in this larger process.  In communications and information, the state endows companies with franchises and rights of way, allocates spectrum, makes supportive R&D expenditures, and contracts for services with private providers.  Boondoggling and corruption of course are regular features.  This, however, should not obscure the fundamental structural reality:  Capital needs the state, no matter how often individual capitalists may protest its supposed incursions.  That’s the lesson of these two stories – the beat goes on.

[i] Bill Vlasic, “Administration Proposes Effort on Driverless Cars,” New York Times, January 15, 2016

[ii] Allisa Walker, “Everything You Need to Know About Obama’s Autonomous Car Plan,” Gizmodo, January 21, 2016..

[iii] Mike Spector and Mike Ramsey, “U.S. Wants to Steer More Driverless Cars,” Wall Street Journal, January 15,  2016.

[iv] US Department of Agriculture Economic Services, “Food Security Status of U.S. Households in 2014.

[v] Thomas Gryta and Kate Linebaugh, “Computer Mogul Michael Dell Stand to reap Billions from FCC Auction ,” Wall Street Journal, January 19, 2016.

[vi] Robert W. McChesney, Telecommunications, Mass Media, and Democracy: The Battle for the Control of U.S. Broadcasting, 1928-1935.  New York: Oxford University Press, 1993.

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