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Radio Free Rothbard

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09/28/2004

What do Charles Tomlinson's article, 'The Myth of the Tree Shortage' and Christopher Westley's blog thread, 'Digital TV is a Civil Right' have in common?

Both timber and radio spectrum are scarce resources that have been managed by government ownership and 'private' licensing. In both cases, government management has led to misallocation, poor use, and lack of conservation. Tomlinson details how private property rights lead to better conservation while pursuing greater profit. Radio, on the other hand, has always belonged to 'the people' ... or has it?

First, to understand profit and conservation, listen to Murray Rothbard's lectures from the 1970s:

You may notice in the second lecture that Rothbard briefly touches on this history of American radio and the FCC.

For more on that history, keep reading ...

The following is from For a New Liberty: The Libertarian Manifesto by Murray N. Rothbard.

Chapter 6: Personal Liberty

Freedom of Radio and Television

... Most people believe that this is precisely the reason the airwaves were nationalized; that before the Radio Act of 1927, stations interfered with each other's signals and chaos ensued, and the federal government was finally forced to step in to bring order and make a radio industry feasible at last. But this is historical legend, not fact. The actual history is precisely the opposite. For when interference on the same channel began to occur, the injured party took the airwave aggressors into court, and the courts were beginning to bring order out of the chaos by very successfully applying the common law theory of property rights—in very many ways similar to the libertarian theory—to this new technological area. In short, the courts were beginning to assign property rights in the airwaves to their "homesteading" users. It was after the federal government saw the likelihood of this new extension of private property that it rushed in to nationalize the airwaves,using alleged chaos as the excuse.

      To describe the picture a bit more fully, radio in the first years of the century was almost wholly a means of communication for ships—either ship-to-ship or ship-to-shore messages. The Navy Department was interested in regulating radio as a means of ensuring safety at sea, and the initial federal regulation, a 1912 act, merely provided that any radio station had to have a license issued by the Secretary of Commerce. No powers to regulate or to decide not to renew licenses were written into the law, however, and when public broadcasting began in the early 1920s, Secretary of Commerce Herbert Hoover attempted to regulate the stations. Court decisions in 1923 and 1926, however, struck down the government's power to regulate licenses, to fail to renew them, or [p. 102] even to decide on which wavelengths the stations should operate.2 At about the same time, the courts were working out the concept of "homestead" private property rights in the airwaves, notably in the case of Tribune Co. v. Oak Leaves Broadcasting Station (Circuit Court, Cook County, Illinois, 1926). In this case the court held that the operator of an existing station had a property right, acquired by prior use, sufficient to enjoin a new station from using a radio frequency in any way so as to cause interference with the signals of the prior station.3 And so order was being brought out of the chaos by means of the assignment of property rights. But it was precisely this development that the government rushed in to forestall.


2.   In the decisions Hoover v. Intercity Radio Co., 286 Fed. 1003 (Appeals D.C., 1923); and United States v. Zenith Radio Corp., 12 F. 2d 614 (N.D. 111., 1926). See the excellent article by Ronald H. Coase, "The Federal Communications Commission," Journal of Law and Economics (October 1959), pp. 4-5.



3.   Coase, Ibid., p. 31 n.


      The 1926 Zenith decision striking down the government's power to regulate or to fail to renew licenses, and forcing the Department of Commerce to issue licenses to any station that applied, produced a great boom in the broadcasting industry. Over two hundred new stations were created in the nine months after the decision. As a result, Congress rushed through a stopgap measure in July 1926 to prevent any property rights in radio frequencies, and resolved that all licenses should be limited to ninety days. By February 1927 the Congress passed the law establishing the Federal Radio Commission, which nationalized the airwaves and established powers similar to those of the current FCC. That the aim of the knowledgeable politicians was not to prevent chaos but to prevent private property in the airwaves as the solution to chaos is demonstrated by the legal historian H. P. Warner. Warner states that "grave fears were expressed by legislators, and those generally charged with the administration of communications . . . that government regulation of an effective sort might be permanently prevented through the accrual of property rights in licenses or means of access, and that thus franchises of the value of millions of dollars might be established for all time."4 The net result, however, was to establish equally valuable franchises anyway, but in a monopolistic fashion through the largesse of the Federal Radio Commission and later FCC rather than through competitive homesteading.


4.   Harry P. Warner, Radio and Television Law (1958), p. 540. Quoted in Coase, op. cit., p. 32.


      Among the numerous direct invasions of freedom of speech exercised [p. 103] by the licensing power of the FRC and FCC, two cases will suffice. One was in 1931, when the FRC denied renewal of license to a Mr. Baker, who operated a radio station in Iowa. In denying renewal, the Commission said:

This Commission holds no brief for the Medical Associations and other parties whom Mr. Baker does not like. Their alleged sins may be at times of public importance, to be called to the attention of the public over the air in the right way. But this record discloses that Mr. Baker does not do so in any high-minded way. It shows that he continually and erratically over the air rides a personal hobby, his cancer cure ideas and his likes and dislikes of certain persons and things. Surely his infliction of all this on the listeners is not the proper use of a broadcasting license. Many of his utterances are vulgar, if not indeed indecent. Assuredly they are not uplifting or entertaining.5


5.   Decisions of the FRC, Docket No. 967, June 5, 1931. Quoted in Coase, op. cit., p. 9.


      Can we imagine the outcry if the federal government were to put a newspaper or a book publisher out of business on similar grounds?

      A recent act of the FCC was to threaten nonrenewal of license of radio station KTRG in Honolulu, a major radio station in Hawaii. KTRG had been broadcasting libertarian programs for several hours a day for approximately two years. Finally, in late 1970, the FCC decided to open lengthy hearings moving toward nonrenewal of license, the threatened cost of which forced the owners to shut down the station permanently.6


6.   The best and most fully elaborated portrayal of how private property rights could be assigned in radio and television is in A. DeVany et al., "A Property System for Market Allocation of the Electromagnetic Spectrum: A Legal-Economic-Engineering Study," Stanford Law Review (June 1969). See also William H. Meckling, "National Communications Policy: Discussion," American Economic Review, Papers and Proceedings (May 1970), pp. 222-23. Since the DeVany article, the growth of community and cable television has further diminished the scarcity of frequencies and expanded the range of potential competition.


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