Clear Channel: an Empire Built on Deregulation

chas smith R.I.P. · From: Encino, CA, USA

This appeared in the Business section of todays Times so it's less interested in the artistic ramifications than the business, although it does address them and the "spoon fed McRadio junk food format" issues to some degree. Personally, what I think is interesting is what deregulation has done to the quality of our lives, going back to the Reagen/Bush deregulation of the airlines to the more recent Enron debaucle and here's Clear Channel, out of Texas with strong ties to the Bush administration.
http://www.latimes.com/business/la-000014361feb25.story?coll=la%2Dheadlines%2Dbusiness

John Macy · From: Rockport TX/Denver CO

Nice read, thanks for the pointer.

Tom Olson · From: Spokane, WA

Chas,

I'm not sure by your post whether you think deregulation has been positive or negative, but I get the feeling it's the latter.

Personally, I feel deregulation of industry is generally good for the consumer. Deregulation of the airlines means much cheaper fares for the most part. Deregulation of the trucking industry means less expensive goods. After all, the original purpose of regulation wasn't to make life better for the individual consumer, but to protect the national interests -- at least in the eyes of the government at the time.

Regarding deregulation of the broadcasting industry, which has occurred only in the last few years, I don't really notice that much of a difference. The radio stations are basically playing the same old crap now after deregulation as they played 5 years ago before deregulation. The way I see it is, "if you don't like it -- don't buy it." In other words, if a radio station plays crap, I don't listen to it.

Also, as in nearly any news story, we may not be getting the whole picture. For example, it's my understanding (and I may be mistaken) that along with easing of limits on station ownership, broadcasting deregulation also is opening up more opportunities for low-power, local "community" stations.

So, in my book, a free market economy is better than a government-run economy. A lot of radio stations may be playing crap now, but either one of two things is going to eventually happen in a free market economy -- 1) the majority of the people are going to start enjoying crap, in which case the stations will keep on playing crap, or 2) the majority of the people will get sick and tired of the crap, and sooner or later, somebody will come up with a better mousetrap that will run the crap-playing stations into the ground.

Smiley Roberts · From: Hendersonville,Tn. 37075

Chas,
Drop me an e-mail RE: this topic. I want to send you some comments that I received concerning it. (click on "profile")

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  ©¿©          ars longa,


  mm         vita brevis 


-=sr€=-

Kevin Hatton · From: Buffalo, N.Y.

Deregualtion leads to concentrations of power of wealth in the hands of a few, and also monpolies. The extra cost of regulation is more than made up for in fuller employment. It leads to a more even and less economically volitile playing field. Airlines are a prime example. The airlines ran much better when they were regulated. Yes the cost is higher. I would rather be securely employed through government regulation (like what use to happen in America before Reagen) than to have situations like the Enron debacle where employees lost their life savings and their livelyhoods. A prime example of why unbridled Capitalism doesn't work. Only for the wealthy.
Like when country radio stations only played real country music. A form of regulation. Stable music to a stable listening audience. Now you have belly buttons and chaos.

[This message was edited by Kevin Hatton on 26 February 2002 at 09:39 AM.]

Randy Pettit · From: North Texas USA

Wow! I respectfully disagree with your macro-economics, Kevin. Gov't regulation does not protect jobs OR keep the general economy on an even keel. Some of the highest post-Great Depression unemployment rates this country has ever experienced were in the mid to late 1970s - an era of intense gov't regulation (including the airlines). Recall the Jimmy Carter "misery index"? Regulation protects only those who are regulated. The consumer pays more because of it. Therefore, it has the same effect as a tax on the consumer. Before dereg of the airlines, flying was very expensive. Now it's like riding a bus. Everybody flies. Even low and fixed income folks can afford to fly. Thousands upon thousands of jobs have been created because of it. When I was growing up, there were maybe 10 or 12 radio stations in my area. After dereg. there are about 30 or 40 now. More jobs. When I was in college, there were two competing cable tv companies in the community. We had the lowest cable tv rates in the country (like $2 or $3 per month). Then the city decided to regulate cable tv, letting one company have all the business (there's your monopoly). After that, cable rates doubled, then tripled, and the service declined (fewer channels, more downtime, etc...). And the other company eventually went out of business (jobs lost). Seeing a pattern here? It may surprise you that most industries actually LIKE regulation because it stifles competition. The airlines were fat, dumb and happy before deregulation. But since dereg., the entire transportation industry has mushroomed with new jobs the past two decades. If unbridled capitalism doesn't work, then unbridled socialism? No entrepreneurial drive, no incentive to expand or improve anything. We'd all be playing playing Harlen Bros. Multi-Kords today.

Earnest Bovine · From: Los Angeles CA USA

Kevin

If your argument is correct, then there would be lots of "real country music" on the radio in North Korea. Can anybody confirm that his is the case?

Carter York · From: Austin, TX [Windsor Park]

You have some very good points, and put things in a nice historical perspective Randy, but I would point out that, even though, 'everyone flies now because it is so cheap', the airline industry is going under, and our government is bailing them out to the tune of billions of dollars, and thousands and thousands of jobs are being lost. Same with the savings and loan fiasco that followed deregulation, once again, billions of tax dollars to bail out poorly managed corporations. And similarly, like Enron, executives whose greed *is* an ingredient, will come out just fine. I don't believe that we need to dichotomize this into all regulation=bad, deregulation=good, it's more complex than that.

Additionally, I would add that 'socialism' is alive and well in the USA as it always has been. Socialism in no way implies that there is "No entrepreneurial drive, no incentive to expand or improve anything" Our own Armed Forces have socialized medicine, socialized housing, etc, and IMO have incentive to expand and improve. Most corporations offer benefits like healthcare, mealplans, etc which are socialist in nature. Socialism simply means that ownership is not privatized. It could fall under government (state) ownership, (see Armed Forces comment above) community ownership (there are *very* successful and innovative community gardens in Austin, for example)... it's everywhere, but we tend to not want to call things 'socialist' round here.........

$.02

Carter

Tom Olson · From: Spokane, WA

But then again . . .

The airline companies that are having the most trouble are those that were around back when the industry was regulated. The airline companies that are doing well (and there are several) are those which sprang up and flourished after deregulation. Is there a pattern there? Hmmmm . . . .

And another thing . . . there's nothing new about government bailouts -- they were going on before deregulation too.

There's nothing wrong with regulation, per se. We must have at least some just and reasonable laws that are fairly enforced in order to keep some kind of order . . . or else we end up with something like Somolia or, to a lesser extent, Mexico.

The issue is not whether we regulate, but whether we regulate the economy. I agree, and I think most others would agree, that safety is one example of an area that requires regulation. Environmental concerns is another area, and so is Immigration, etc, etc.

But, the economy runs better when it's not choked off by government regulation. Economists have proven it over and over again.

There may be some bumps when you go from a regulated industry to a totally deregulated industry, but that's to be expected.

Eventually, an unregulated industry will develop into a well-oiled, efficient machine, as has pretty much happened with the trucking industry which was deregulated in 1982.

Monopolies ARE a bad thing -- that's why there are anti-trust laws. The reason monopolies are bad is because it places a restriction on free-trade -- as does government regulation.

And, don't forget . . . corporations are entities created and given life by state law, and corporations live in accordance with state incorporation law.

If some of the Enron corporate officers did, in fact, do bad things or break the law, they didn't do because of the absence of government regulation -- they did it simply because they decided that they wanted to do bad things and break the law. Government regulation of the economy isn't going to prevent that sort of thing.

Socialism is diametrically opposite from the idea of the free-market economy. Socialism is basically communism.

Don't get Socialism confused with cafeteria plans and the like. Corporate meal plans and HMO's are not run or owned by the government. Contrarily, they are private enterprises, or results of private enterprises, attempting to provide a better product or better services or to provide benefits to their employees.

The term "socialized medicine" refers to the fact that the government manages and administers health care. It has always been this way with regard to the armed forces, but then again, the armed forces are part of the government, so why wouldn't it be this way? Should service personnel have government health care or should they be required to go out and find their own private health care?

So, my book still reads, "gov't regulation of the economy = bad."

Randy Pettit · From: North Texas USA

Of course the armed forces are not part of the free-market economy, as if our gov't had several "competing army corporations" from which to choose if we go to war. They have their own legal and court systems. Members of the armed forces don't even have the same rights as civilians. Private companies began offering health plans, retirement plans, etc..., as inducements to attract top talent. Now they do it because everybody else does it, and they want to remain competitive. But I digress. Yes, I acknowledge that our economy is extremely complex. Companies fail every day for a variety of reasons ranging from competition, to greed, to just plain dumb management decisions. My overall point was, "why not let the market decide"? The 9/11 attack was an extraordinary event in our nation's history - that's why the airlines and travel industry are hurting now. A regulated airline industry would not have prevented those thugs from flying planes into the WTC. But since the original post was about radio, I'll put forth another deregulation success. We have a mighty fine radio station here in the Dallas area (KHYI-FM) with a playlist ranging from Little Jimmy Dickens to Sonvolt. We have the usual McNashville stations, but we also have an alternative station, because someone had an idea, took the risk, came up with some cash, developed a business plan, went to a bank, sold advertising, (oh, and worked hard) and now has a successful radio station. Now lots of local artists actually have a radio outlet for all to hear in the listening area. If KHYI fails, it will likely be because there were not enough listeners to support the advertising. But who knows, perhaps Mr. Mays (Clear Channel) is investing in "buggy whips". With XM, the internet, mp3, etc..., music on the radio may eventually become a thing of the past.

[This message was edited by Randy Pettit on 26 February 2002 at 03:27 PM.]

Carter York · From: Austin, TX [Windsor Park]

Tom,

Agreed on a lot of your points, please note that I didn't state or imply that bailouts *weren't* around pre-deregulation... perhaps the current situation with the airlines is a 'bump' in the road, as the industry is heading towards the inevitable 'well-oiled machine'. (they should take a look at Southwest Airlines for one, most airline food is equivilant to their bag of peanuts anyway).. Also, my intent was to show the socialist 'origins' of some of our healthcare, etc, not to state that they are died-in-the-wool socialism. I do understand the difference between a cafeteria plan and communism. Communism is a hypothetical extension of socialism, I don't believe that a classless, stateless society can truly exist.

But I still don't know about the balancing of things like safety regulation with a 'free market'...
How can we balance safety regulations and a 'hands-off the business part' of industries that have some many arms and fingers and support industries? I don't know, personally, we seem to have dug a big ol hole, and some folks are still diggin... Some areas seem in conflict with one another. If the airlines are pressured into using cleaner burning fuel, for instance, what happens when the suppliers jack up their price? Seems we would pay higher fares. I'm certainly not arguing for economic regulation, but there are some difficult considerations, and the road to the well oiled machine can be bumpy.....

How do you think industry and regulation can co-exist? I can't seem to seperate them when we're talking about the same corporation. Did this start as a quasi-music post? Anyway, I'm eager to hear any comments or thoughts on that you have....and fire away if you need to....

regards,
Carter

my book has a *chapter* in it called 'gov't regulation of the economy = bad'

Carter York · From: Austin, TX [Windsor Park]

I just read your last post Randy, and you might be right about music not being on the radio in the future, but the internet opens up some pretty cool options for music dissemination. It's too bad that the radio frequencies are so limited, considering how many more stations there could be....but then again, a few years ago we didn't have internet radio or satellite radio, which are both far reaching...

Carter

Jeff A. Smith · From: Angola,Ind. U.S.A.

About the Savings and Loan debacle-

That industry had its beginnings in government planning, and was under the paternalistic care of government all the way up till the Reagan administration, when the worsening state of that industry came to a head. It was always isolated from the free market, and that was its problem.

When Reagan "deregulated" it, the S&L's were encouraged to expand their activities beyond the housing industry, which was their original domain. Since government was willing to stand behind the industry in more and more risky ventures, the "moral hazard" factor came into play. The industry knew that there was no real incentive to function in a responsible way, since government tacitly stood behind their misadventures. Government's willingness to do this is a distorting and harmful factor in many economic areas.

The bottom line, in my opinion, is that the S&L industry was never totally deregulated. If it was, it would have been allowed to fail. Government's track record of standing behind cities, industries, the banking business, etc., only increases the likelihood that there will be irresponsible financial behaviour. If failures aren't allowed to happen, the market will never truly correct itself.

For the record, I'm a card-carrying Libertarian. I wouldn't use Reagan as an example of this philosophy, even in the economic realm-(His deficit-spending, for example.) I find it hard to understand how someone wouldn't go out of there way to explore solutions based on individual freedom, rather than give government another excuse to rule our lives.

Kevin Hatton · From: Buffalo, N.Y.

What the Enron officers did was precisely because of the lack of government regulation as relates to off balance sheet items and using equity to increase phantom profits. Its a ponzy scheme set up by world capitalists who have no concerns over social ramifications while lining their own pockets with workers life savings. Socialism is not Communism. Social reponsibilty is everyones concern and should be the governments also. The excesses of unbridled capitalism are taught in all economics macro 101 courses at universities. Market economies don't always work. Medical care as an example. The AMA purposely limits the amount of students and internships to keep the cost of health care high. They have the wealth to manipulate the market. If the government opened more medical schools and produced more doctors(socialism) then the price of health care would come down. More supply vs. demand.

[This message was edited by Kevin Hatton on 26 February 2002 at 05:32 PM.]

[This message was edited by Kevin Hatton on 26 February 2002 at 05:33 PM.]

Donny Hinson · From: Glen Burnie, Md. U.S.A.

Capitalism promotes economic growth, no doubt about that.

But, unbridled growth leads to...well, I won't tell you.

(Just think about what happens to a tree...when it gets too big.

)

Randy Pettit · From: North Texas USA

Boy, it’s great to see Off Topic back on the front page. I certainly don't know all the ins and outs regarding the Enron mess, any more than I know the details about Billy Jenkins' new Emmons. But what the Enron officers did (in possible collusion with Andersen auditors) was criminal. They will face criminal prosecution. Don't confuse regulation with laws. They broke laws.
What is "unbridled capitalism" anyway?

Jeff A. Smith · From: Angola,Ind. U.S.A.

quote:
The excesses of unbridled capitalism are taught in all economics macro 101 courses at universities. Market economies
don't always work. Medical care as an example. The AMA purposely limits the amount of
students and internships to keep the cost of health care high. They have the wealth to
manipulate the market. If the government opened more medical schools and produced more
doctors(socialism) then the price of health care would come down. More supply vs. demand

Obviously a deep subject, and I don't want to drift any further off topic, except to offer two more thoughts in a postive spirit-

I'm sure you'll agree that just because there is an official version of a subject taught in universities doesn't make it true. Free market economists like Milton Friedman, Murray Rothbard, Ludwig Von Mises, F.A Hayek have earned a great deal of respect as well. Just because it's taught that F.D.R. was the greatest president doesn't necessarily make that true either.

As far as medical costs, many have charted the dramatic rise in costs and seen that it correlates directly to government involvement in that sector. As far as the A.M.A., I agree that they have a harmful influence, but that influence enjoys governmental protection. I've read discussions about the positive results that would follow breaking their monoploy on health care.

Now I'll let this thread carry on with a "clear-channel," if anyone is interested in carrying on a casual discusion on this topic, feel free to e-mail me.

Dave Birkett · From: Oxnard, CA, USA

Free-Market vs. Regulation: Why must it be one or the other? Free markets work well in certain areas and times. Then the balance shifts and regulation becomes necessary until it becomes too restrictive, then .... Absolutists frighten me.

Tom Olson · From: Spokane, WA

I don't think it has to be one or the other. There can be a healthy mix of regulated and non-regulated aspects of a society. For example, government safety regulations may appear burdensome, but in the long run they provide a net benefit (mostly) through improved worker productivity, less health care costs associated with injuries, etc. etc.

But, economic activity is the real "heart" of society. The economy is why we're all here and doing what we do. If not for the economy, we'd all be fighting one another for that last scrap of meat still on the carcass outside the cave entrance.

So, economic activity should not be regulated (e.g. price-setting, setting supply levels, etc), because economic regulation tends to stifle economic growth (at least in mature industries).

Also, a free-market economy tends to be "self-regulating" so to speak, by way of the old rule of supply and demand (you know the drill). This is what make the economic aspect of society different from other aspects.

For example, let's consider safety again. Safety is not a good thing to leave to its own devices. This is because some people or entities will tend to not want to spend any money on safety in unregulated situations, and thus, will be very unsafe which is very bad, because people get killed, etc.

On the other hand, with regard to economic activity, if someone doesn't run their business intelligently, it simpley fails and nobody gets killed. In fact, it's better if the poorly run businesses fail, because that allows the more inovative and intelligently run businesses to propegate -- which benefits everyone. Government economic regulation generally allows poorly run businesses to stay in business longer than they would have, had it not been for the regulation.

So, a health mix of regulation can be good.

Regarding Enron, I don't know exactly who did what, but it appears that some of the corporate officers were involved in some shady dealings. I don't know how government regulation would have prevented that. Heck, the government can't even keep its own people from getting involved in some shady dealings every once in a while. Since the activities of corporate officers are bound by state statutes which govern corporations, the state legislatures could enact changes to the laws if that would help. Let's see what happens.

What bugs me is that what ever happened, it's most likely a state crime governed by state laws. Yet our Congressmen are poking their noses in it and spending our federal tax dollars to do it.

chas smith R.I.P. · From: Encino, CA, USA

Wow, there's a lot to talk about here. Is government regulation or deregulation good or bad; this could easily be a dissertation topic. I can think of examples that are good arguments for both pro and con. Perhaps the best argument against government regulation is that the government will be doing the regulating. Given that our elected officials are so easily bought and sold after having spent so much to get or stay in office, it's little wonder that business and 'special interest groups' are able to influence the regulation and deregulation of their products and services.

It is my understanding that the purpose of government regulation of business and industry was to protect the consumer from unscrupulous business practices, which would include dangerous products, to protect the workers from working in unsafe environments and to ensure a reasonable wage and to breakup monopolies so as to protect and encourage small businesses and entrepeneurs and ensure competition. Since the government is elected to represent us and to work for our best interests then it stands to reason that regulation is good.

Quick comment on socialism. I grew up in the Commonwealth of Massachusetts. Common wealth refers to socialism, and soon enough I'll be faced with trying to get by on social security. The problem with all of the ...isms is they look good on paper and work well in concept.

The Enron bankruptcy, biggest in history, or the S&L crisis, biggest robbery in the history of the world, doesn't affect me as immediately as say OSHA, the EPA or the AMA, for example, which were initially formed to protect me....

Kevin Hatton · From: Buffalo, N.Y.

I hope that you don't have money in the stock market or in your retirement account right now. From the way you guys are talking, you seem uninformed. Some of the FASB accounting standards were DERGULATED a few years ago that aloud this ENRON scandal to happen. There are many more companies out there using these voodoo accounting pratices to drive up the price of their stocks. There will be more bankruptcies. If that doesn't directly effect your employment or your retirement I don't know what does. EPA and OSHA are not throwing you in the streets and robbing your retirement savings.
Also, economics courses are standardized in all accredited uinversities. If you choose to make up your own beliefs its called ignorance. Government regulation came about because of the Carnegies, Rockefellers, Phipps and so forth. Basically slave owners who controlled all the wealth in the country. You know, like Bush buying his son the presidency. But, I digress. I agree that there has to be a balance. Right now, there is too much of a hands off policy.

[This message was edited by Kevin Hatton on 27 February 2002 at 09:55 AM.]

Tom Olson · From: Spokane, WA

Kevin,

No offense intended, but you seem a little mis-informed yourself. The FASB has always been an autonomous, non-governmental, self-regulating body of the Accounting Industry. Although the SEC has statutory authority to mandate accounting proceedures for publically held corporations, it's always allowed the accounting industry (through the FASB) to self-regulate itself in this regard (at least as far as I know). The FASB may have changed its accounting standards recently, but it wasn't because of government deregulation.

Also, like I said before, I don't know what exactly happened at Eron, but from what I've heard, the problem stems from people BREAKING the rules, not from people FOLLOWING the rules.

The low Enron stock prices are not THE problem -- the low stock prices are a RESULT of the problem, which is that the corporate officers violated their fiduciary responsibility to the stockholders by making bad deals which ran the company into bankruptcy.

Yes, there are many companies out there which use accounting methods solely for the purpose of driving up stock prices. Many of these companies are healthy, thriving companies.

But, artificially driving up stock prices is a lot different than corporate officers running the company into the ground while lining their own pockets.

I don't know about standardization of college courses. Apparently, since I didn't go to Berkley (Hello Comrads!), my economics courses didn't teach about the perils of unbridled capitalism.

Regulation (such as the ICC) came about to help establish a strong, healthy economy that was in it's infancy. For example, the ICC controlled transportation rates and supply of transportation services in the early years so that underdeveloped regions would have the necessary goods and sevices they needed to develop economically. However, nowadays, there are no more "frontier" areas and the transportation sector has matured and stabilized.

Fortunately, the government realized this, and ceased its ECONOMIC regulation of the transportation industry. Notice I said ECONOMIC regulation. The government still regulates the safety aspects (among others) of nearly all economic sectors.

Thus, what I believe most of us are referring to when we say "deregulation is good" is the deregulation of "economic" aspects of a given market sector. The economic aspects refers to government price-setting and government mandated supply curves. That type of thing is not good for a mature, thriving economy because the economic principles regulate the supply and demand automatically.

By the way, the Carnegies, Rockafellers, etc. got rich BECAUSE OF GOVERNMENT ECONOMIC REGULATION. The government regulation basically made the monopolies available to them. The government then realized this and the antitrust laws were brought to bear on those guys.

By the way, if you think Bush bought his son the Presidency, then it seems like you're the one making up his own beliefs.

Randy Pettit · From: North Texas USA

Very well (and factually) stated, Tom. As far as "standardized" economics courses in universities, I can't think of two more diametrically opposed schools of thought in the "dismal science" than Harvard and Univ. of Chicago. Reminds me of the old one liner, "If you took all the economists in the world and placed them end-to-end, they still couldn't reach a conclusion".

Kevin Hatton · From: Buffalo, N.Y.

Bush not only bought his son the presidency, but bought him a baseball team before that. A C student with no visible means of support other than his fathers wealthy connections. Phony corporations were created to funnel money into his campaign. What we have now is practically a monarchy.
I agree that economic regulation is not always desireable.

[This message was edited by Kevin Hatton on 27 February 2002 at 02:17 PM.]

Jeff A. Smith · From: Angola,Ind. U.S.A.

Well, since Chas weighed in, I'll assume it's okay to continue in this "economics" vein. Kevin said: