The Regulator Who Loved Markets


The free market lost a friend Friday and, believe it or not,it's a regulator. Federal Communications Commission (FCC) ChairmanMichael Powell announced that he is stepping down in March after aturbulent, controversial tenure in office. He will be sorely missedbecause he is the rarest of species-a rational regulator whogenuinely believes in the superiority of markets over mandates andcapitalism over central planning.

After all, how many bureaucrats make a habit out of quoting theworks of Friedrich Hayek, Joseph Schumpeter, Ronald Coase, and AdamSmith? But Powell did more than simply give these thinkers lipservice; he integrated their teachings on markets, incentives, andhuman liberty into almost everything he said or did during histenure at the FCC. "The market is the best vehicle designed bymankind for innovation, for technology change and evolution. Iwould caution we review fully the lessons of economic history todeepen our appreciation of that fact," he noted in an October 2001speech.

In a speech a few months earlier before members of the FederalCommunications Bar Association-some of the Beltway's biggestproponents of "public interest" regulatory intervention-Powelldeclared, "Contrary to the classic bugaboo that markets are justthings that favor big business and big money, market policies havea winning record of delivering benefits to consumers that dwarfsthe consumer record of government central economic planning. Thus,if you are truly committed to serving the public interest, bet on awinner and bet on market policy."

More impressively, this is a man who once stood before a hostilegroup of telecom industry service resellers who were clamoring formore government-mandated infrastructure-sharing and told them,"There is no upside, in the long run, being dependent on yourprimary competitor for your key assets, or in relying on thegovernment to protect or subsidize your service. Wherever andwhenever possible build facilities. Only by controlling your ownessential facilities do I believe you can differentiate yourservice. And, the more you possess your own assets, the less youneed to look to the government for salvation." Needless to say,they didn't appreciate that. But that's the way Powell worked: nopulling punches; no need to capitulate to appease an audience; noneed to sell out freedom for short-term political gain.

In fact, when asked at his very first press conference afterbecoming Chairman about the existence of a supposed "digitaldivide" in America he famously said, "I think there's a Mercedesdivide-I'd like to have one; I can't afford one." The self-anointed"consumer advocates" went after him with a vengeance for that one.But he has never recanted those remarks; rather, he has repeatedlystressed in his subsequent speeches the amazing and unabateddiffusion of computer and communications technologies and servicesthroughout our society.

Rhetoric aside, Powell worked hard to translate his marketprinciples into action, occasionally meeting with some success, butmore often being greeted by overt hostility from special interestsand other status quo-oriented policymakers. One area where Powell'svision yielded tangible results was spectrum policy where hisleadership helped give rise to a veritable public policy revolutionat the FCC. Powell formed a Spectrum Policy Task Force that issuedan amazing report containing a sweeping indictment of the agency'spast record. As a result, remarkable changes are underway at theagency that will unleash the wireless sector from the shackles ofthe command-and-control central planning techniques that havehindered it for over seven decades.

When it came to telecom and broadband policy, Powell's visionhas been equally clear: "I believe strongly that broadband shouldexist in a minimally regulated space." He attempted to push throughnumerous reforms to achieve that vision but was directly thwartedon one important deregulatory initiative by fellow RepublicanCommissioner Kevin Martin, who cast his vote with the Commission'sDemocrats in favor of expanded regulatory oversight by stateregulators. Of course, it doesn't help that Powell's superiors inthe Bush Administration have never lent any serious support to thereforms he has proposed. The Bush team was content to talk a biggame when it came to broadband deployment and telecom deregulationbut then let Powell take all the heat when it came to thecontroversial steps needed to get us there.

Finally, despite the hysteria generated by the opponents ofefforts to relax archaic media ownership regulations, Powell pushedthrough some limited relaxation of existing rules. Warning of thedangers of government overreach on the this front, Powell noted,"[W]hile we are right to concern ourselves with Citizen Kane, weshould not use that concern to justify the resurrection of KingGeorge. Our founding fathers said little about commercial owners ofnews and print, but they reserved the top spot on the bill ofrights to condemn the government from foisting its values,preferences, viewpoints or tastes on a free people."

Will history judge Mr. Powell kindly? It depends who writes thathistory, of course. But for those who cherish liberty and limitedgovernment, he should be remembered as a man who fought to reversethe widespread presumption held by his fellow regulators thatmarket failure is everywhere and that only incessant interventionby benevolent bureaucrats can protect the amorphous "publicinterest." Michael Powell's legacy is that the regulation is notsynonymous will consumer welfare; government failure is the biggerconcern. Let's hope his successors heed that lesson.