4. Report on Ronald Coase Lectures

4. Report on Ronald Coase Lectures

July 16, 1957

Mr. Kenneth S. Templeton

Dear Ken:

The lectures by Professor Ronald H. Coase on Radio, Television, and the Press are an excellent piece of work, which I would recommend most heartily.

Lecture 1, on the general principles of freedom of the press, is a superb piece of work—crackling with wit, keen insight, and libertarian doctrine—which I would advise everyone to read in toto. Note Coase’s points:

1. That under planning, government, if it cannot force labor directly, must use exhortation and condemn any public criticism as subversive
2. That experts in an industry threatened with nationalization must keep silent or lose their jobs once they are nationalized—so that more and more the only criticism of the socialist program is by the remote and ill-informed
3. His keen discussions of the bureaucrat

The tyranny of the U.S. Post Office is exquisitely set forth.

One thing, I must confess, gave me particularly keen pleasure: the unfrocking of Professor Jules Backman of NYU as a “right-winger.” Backman is deftly exposed for what he is: a kept economist who has no firm principles at all.

Coase’s point about government housing and its inevitable results is excellent—he shows its effect on free speech and freedom generally. He notes the de Jouvenel-Director position that intellectuals are pro-free speech and anti-free enterprise because of their vested interests.

Finally, after showing that a loss of free enterprise will also eliminate free speech, he says, “If we had to sacrifice either economic freedom or political freedom... it is in the general interest that political freedom should be abandoned rather than economic freedom. For most people it is more important to preserve the market than to preserve democracy.”

Lecture 2 is also excellent—and comes out magnificently for private property in air frequencies. Coase shows that the problems of “unrestricted competition” that are supposed to result from laissez-faire were actually the result of not granting private property rights in air channels. Unfortunately, Coase hedges a bit at the end, but this detracts little from his bold statement of basic libertarian principle. There is a hint that Coase may favor antitrust laws, but this again detracts very little from his overall position here. Once again, the wit sparkles, and leftist arguments are skewered with aplomb and dispatch.

Lecture 3 carries on Coase’s fine work with an argument for subscription TV. Coase is too harsh on the present commercial TV system when he claims that it injures consumer satisfaction. But certainly he shows conclusively the damage involved in the FCC’s prevention of freedom for subscription TV. The socialistic arguments against permitting subscription TV are skewered neatly. (If commercial TV is distortive at present, it is undoubtedly due to the suppression of subscription TV.)

Lectures 4 and 5 apply his previously developed principles to the British scene. Lecture 4 reveals the development and the philosophy of the BBC, and the personality of the guiding genius of the BBC is deftly pointed up as the prototype of the arrogant bureaucrat. The dictatorial philosophy of the BBC is very neatly demonstrated. Lecture 5 is the story of competition at last emerging in British television. A high standard of wit and insight is retained throughout. Thus, there was the anti-commercial TV argument of Miss Margery Fry, who “suggests that competition, apparently in any field, is undesirable. Miss Fry pointed out that when several ladies are competing for the attentions of a gentleman, ‘they are not likely to compete with the noblest sides of their nature’.” And we are left with the optimistic note that the new commercial TV seems to be succeeding and out-drawing the BBC.

In sum, Coase’s lectures are a splendid affair, and I am looking forward with enthusiasm to his final research on the matter. I hope that the final publication will not water down the “radical” spirit of these lectures too much.

The Ronald Coase Lectures

Professor Coase’s lectures are excellent. Essentially he repeats his previous set of lectures on the post office, radio, and television, and is squarely for private enterprise and freedom in each of these fields. He shows that the post office originated in government thought control attempts and that the government still continues to censor and suppress communications it does not like.

He shows how both the high-cost and the low-cost consumers of postal service suffer from the uniform rate, which functions as a subsidy to the high-cost areas. Coase realizes that government control and censorship of radio and TV is as indefensible as government control of the press. The fallacy behind the argument that government must allocate limited radio wave frequencies is exploded. And Coase is particularly fine in making clear that private individuals should be able to own wave-frequencies in the same absolute sense as they can own land.

He defends the informative and even creative functions of advertising, and attacks any government regulation in this field, ending this section with a caustic statement that political propaganda is far worse, and consistently so, than any business propaganda in advertising. Coase has a keen analysis of why subscription TV would be preferable ideally to present-day TV, but the real proof would have to be in the marketability: if the present setup is more economical, then it is the most preferable. Coase, unfortunately, fails to see this adequately. Coaseh as good defenses of subscription TV against the leftists who complain that TV viewing would no longer be free.

Coase’s other errors: he concedes that advertising by business can be “wasteful,” if not informative or in error on estimating profits; he overstresses the problems involved in allocating owned frequencies to broadcasters; he worries about the international problems, without considering that, since frequencies are regional and waves lose their power after a certain range, there is no reason why absolute ownership over frequencies cannot be granted over their possible range of broadcast, or, rather over the range at which the first user is actually making the broadcast.

There are a lot of merits in the summary of Coase’s first, general lecture on government and the economy: the dangers to liberty of government planning, as well as to economic freedom; the inevitable moral corruption and self-righteousness of government officials—and of left-wing intellectuals.

Yet despite all this, at the beginning of his lectures Coase reveals grave collectivist deviations in his thinking. He admits frankly that “he was not opposed to State intervention in the economic “system.” A modern free-enterprise system, Coase believes, requires a highly developed legal system to settle contracts and disputes. Fine, if he defines it properly, but he then goes further: to call a corporation a “creature of law,” which it is not de facto, and to say, wrongly, that “individuals, left to themselves, would act without proper regard for the effects of their actions on others,” and this includes not only violence, but “a wide variety of harmful acts” which the government must punish, “including those that have the effect of making the economic system less competitive.” But since the State can and has defined almost any act as reducing competition, this opens the gates for tyranny, or, as Coase admits, “a very considerable regulation of business by the State.”