Murdoch the Indefensible?

The people over at News International have been very naughty boys, that much is clear. Yet there is something troubling about the way this saga has been covered that stretches even to the libertarian blogosphere. Murdoch’s bid to buy BSkyB was a perfectly non-aggressive transaction, yet it was blocked. An application for permission he should not have needed was “deferred” and then abandoned due the pressure of the mob on the State to exercise it’s discretion over a private sale. I wonder if I am alone in noticing that this was wrong; that the State should never have had that discretion in the first place?

News International, Rupert Murdoch and his executives have become the target of sustained speculation, and vilification in daily bulletins over the accusations of privacy infringement and bribery. I have nothing new to say about those accusations and will spare you, reader, a token rehearsal of why those acts were wrong. It is good that Rebekah Brooks has been arrested and I support the application of the rule of law to the whole host of them, Rupert Murdoch included, but I cannot ignore the obvious violation of property rights codified into that law, as it stands.

For a right-libertarian life liberty and the pursuit of happiness requires ownership of our property. Since property is the justly acquired outcome of ones life depriving a man of his property, or of his control over it, is to deprive him of a part of his life. The state’s power of discretion over the sale of BSkyB is an imposition upon Rupert Murdoch’s life and upon the lives of shareholders who own the other 61% of BSkyB. Those shareholders are prohibited, on the basis of one man’s whim, from selling their own property. This means they are prohibited from making good on their investment and achieving the outcome they expected from part of their lives.

This is justified with reference to media plurality, and a fit and proper persons test. Neither of these justifications deserve our sanction. The second should be simple to dismiss, we do not endorse a society which welcomes participation only from screened and favoured applicants, but one based on personal initiative and the consent of those directly involved. This is the law of “mind your own” and the same principle is at work when we stand up to oppose CRB checks and the formalisation of family life. We should be consistent when it comes to the affairs of businessmen.

On the topic of monopolies I will need to set out my case.

Some people see giant corporations currying favour with Government and react emotionally by condemning all corporations above a certain size, while letting the state off the hook for creating those corporations and granting those favours in the first place.

Remembering that limited liability companies are a legal invention, Libertarians identify the actions of corporations as natural for artificial persons in an economy thick with artificial regulations, and the power of Government as the root cause of both. We know that regulations increase the cost of setting up a business, and that larger businesses tend to cope better with new regulation. As such, regulation causes consolidation and reduces the number of competing firms to a few large ones. In broadcasting the Government apportions the available spectrum, and in doing so limits the number and picks the names of the winners before the game even starts. The subsidised BBC also provides stiff competition and crowds out alternative broadcasters. It is little wonder then that media plurality is an issue. The perfect conditions for oligopoly were created by government.

As ever, the state’s answer to a problem caused by imposing it’s will on others is to impose it’s will on them again. Before it was revealed that the Dowler’s had been affected by phone hacking Murdoch was playing a perverse economic game to avoid the arbitrary competition rules that eventually prevented the bid. Painted as populist and only concerned with short term profit he was asked to hive off Sky News and exchange success in one dimension for success in another. He could not have both market share and maximum profit, but isn’t a bid for market share a long term strategy?

Afterwards the game changed. Murdoch became so unpopular that allowing the bid through on the basis of media plurality was unthinkable to the government, who knew it would cost them votes. Responsibility for the proper application of the law was shirked and the decision delayed and passed on to bureaucrats. This is not the Rule of Law but Rule by Popularity Contest. The perverse consequence is that Murdoch was forced to make himself more popular by sacrificing his past success and closing News of the World. Knowing that he was still unable to win sufficient popularity to please his coalition masters he eventually abandoned the bid and was left without News of the World or BSkyB.

Justice is not a popularity contest to determine the use of aggression; it is the use of arbitration and objective rules to replace aggression. As libertarians justice is at the centre of our creed right along with the non- aggression principle which these laws violate. Despite that, we have not applied it when discussing this story on our blogs. Every aspect of the story but the property rights angle has been discussed, but not that one.

On Saturday we turned out in the rain to defend the unpopular smokers of Stony Stratford. We did that because the restriction of one class of people is the thin end of a wedge which represents the persecution and exclusion of any unpopular minority. Rich businessmen – Bill Gates, the bankers, the supermarkets etc – all  have different problems but don’t they also enjoy the protection of the non-aggression principle? Isn’t this mad law just the same wedge applied to another crack?

I hope Murdoch is not so unpopular that he will not be defended on principle.

Simon Gibbs – Libertarian Home
Hanging Murdoch image by Surian Soosay

Simon Gibbs

Simon is a London based IT contractor and the proprietor of Libertarian Home. Working with logic and cause-and-effect each day he was naturally attracted to nerdy libertarianism and later to the benevolent logic of Objectivism. Find him on Google+ 

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  4 comments for “Murdoch the Indefensible?

  1. Ken Ferguson
    Jul 19, 2011 at 10:29 am

    Nice post Simon and I agree that the sight of the politicians pandering to the masses by punishing Murdoch is somewhat nauseating.

    However, I cannot agree with you regarding monopolies as it seems to me one of the few roles government should have is to ensure the operation of free markets. And this is a role they have largely abdicated from in the last 20 years to the serious detriment of the consumer of financial services, utilities, food etc.

    Because all corporations working in all markets tend toward creating monopolies and this is not just a response to regulation but a natural development of the capitalist system. There is an awareness that efficiencies can be realised through economies of scale and excess profits generated through achieving monopoly situations. It seems to me Government has colluded with the corporations in this.

    So going by the logic of your argument, you would have no objection to Walmart buying up Tesco and Sainsburys.

    Really?

    • Jul 19, 2011 at 12:30 pm

      Of course I would worry about the price of the food I buy going up, but this should never mean I advocate the use of agression to stop the formation of a larger company, or break it up afterwards.

      At the end of the day, non-agression is a moral principle which by definition (Objectivist definition anyway) must guide every action. Your position amounts to a norm of non-agression, or “not agressive generally unless I feel scared about prices going up”, and is not consistently moral.

      I shouldn’t need to now consider what would happen, but I will, either Walmart would continue to operate Asda, Tescos and Sainsbury’s separately, or it would consolidate. Also, along another dimension, it would raise prices or it would not raise prices. Obviously if they operate separately and don’t raise prices, then there isn’t any new issue to consider, and we can get a beer in. If they do make a change, then a change on either dimension creates an opportunity for new entrants, either by creating an excess of supply, excess of space for outlets, a demand for additional variety in the shopping experience and product lines or some combination. What would stop the entry of a new comepetitor? In particular, a competing home delivery service? The only potential culprits are tax, the minimum wage, and the town planning committees.

      There is another scenario, in which they neither consolidate or raise prices and reinvest in new stores and reduce plurality further. If prices cannot be undercut, I still don’t care. I’m certainly not going to begrudge anyone the additional profits. If prices can be undercut, then I we see new entrants and the problem is corrected.

  2. John B
    Jul 22, 2011 at 9:12 am

    The State should have as few roles as possible.
    One does not need them to control monopoly.
    Monopolies self-destruct when they get too big, lazy and inefficient.
    As Simon notes, the only reason monster corporations happen is because state regulations make them appropriate to the artificial situation the state creates.
    Margaret Thatcher began privatisation and it was great.
    However the “controllists” saw power slipping away and redefined privatisation. Basically handing the state interests over to mini states.
    In South Africa in the early days of privatisation and before the UK version had become so corrupted I was intrigued to see the state telephone provider, Telkom, privatised by being handed over to a private company. Only thing was the major shareholder in said company was the SA government!
    Perhaps that’s where they tried it out and then began to run it, with or without modifications, as the privatisation model in Britain and elsewhere.
    I am not enamoured with Murdoch or his staff as people. I am certain they would not like me at all!
    But the maximum possible freedom to conduct business is the only sane way.
    I think where abuse is found, it is usually because of an artificial situation that has been created.

    • Jul 22, 2011 at 2:09 pm

      And if SA hadn’t done that they’d have a thriving near-sourcing industry taking on clients from a massive strip of Africa and Europe. Same languages, same timezone they’d be “coining it”, but behold the dire state of data connections 🙁

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