# Cable TV: Exhibit A against the free market **URL:** \ **Category:** Great Debates\ **Created:** [August 13, 2013, 8:45am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118 "2013-08-13T08:45:09Z")\ **Posts on this page:** 9\ **Page:** 2
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [August 14, 2013, 2:19am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/21 "2013-08-14T02:19:23Z")
> [@Age\_Quod\_Agis](#): > > The NFL is in the business of making as much money as possible. If they could actually get more money by going solely to pay per view, then they probably would. They haven’t. This either means that they’re wrong (which is possible), or that your scenario wouldn’t actually make them more money (which I think is more likely). I never said it would make them more money. I said it might make them as much money. I also said (or strongly implied) that the only reason they might make such a switch is because unbundling undercut the revenue they were getting by selling to ESPN (and NBC). So long as bundling is in place, they have no reason to mess with something that is working very well. But chewing this over some more makes me think of another point which I think exposes the flaws in the short term thinking endemic in capitalism especially among companies that are publicly traded. Let’s say (just for the sake of argument) they did figure out that going to PPV and charging really high prices would double their profits, at least in the next five years or so. If they were publicly traded (rather than being owned by individuals or small consortiums as they currently tend to be), they would feel extremely heavy pressure from stockholders (who are mostly not in it for the long term) to do so. But of course there is a clear danger in this approach that could, over the long or even medium term, cook the golden goose. Even with that doubling of profits, their actual fan base would be greatly reduced (and a lot of former fans would grouse about how greedy they are, while other more casual fans would just be like “whoa, pricey–whatever, I’m out”). I expect there would be attrition in that fan base over the years as it became harder for casual fans to dip their toes in and get hooked. In fact, I think this may be exactly what happened with prizefighting (along with some social changes around head injuries, which can also be a factor in football). > [@](#): > > Pharmaceutical companies have to spend millions of dollars developing that life saving drug, and millions more getting their drugs approved through trials. They don’t spend all that time, effort, and money out of the goodness of their hearts. They do it because they can make money by selling the end product. > > It might provide the most immediate utilitarian benefit if the state took over all these products and provided them for free to everyone, but that would completely undercut the incentives for future entrepreneurs to develop or improve on those products. Why? If the government pays researchers to develop these drugs, and perhaps offers something like a “prize” (a big multimillion cash reward) for developing something truly lifesaving, why couldn’t that work just as well as an incentive? Then once it is discovered, it is priced based on its production and distribution costs, not on how much a greedy capitalist entity can squeeze out of desperate, dying individuals. > [@](#): > > The fact that you can envision a scenario in which customers are provided more choices – for example, cable companies do not bundle their channels – does not mean that your scenario is better in the real world. As reported in The New Yorker, [getting rid of channel bundling probably wouldn’t lead to lower prices or more choice](http://www.newyorker.com/talk/financial/2010/01/25/100125ta_talk_surowiecki): I really wonder if you read my OP carefully. I am _against_ unbundling. I am **pro** -bundling. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [August 14, 2013, 2:24am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/22 "2013-08-14T02:24:42Z")
> [@aNewLeaf](#): > > Turn your cable off, give your TV away. You won’t miss it. 🙂 Absolutely. I gave up on cable years ago - in the 90s - and haven’t really missed it. When I feel the need to catch something I have Netflix or Amazon Instant. But it’s not an often thing. There is, simply, nothing I’ve seen on television worth giving up my time to watch. Much less pay $20/month or something. Hell, I’m bucking paying The Washington Post $14.99 per month and they at least provide worthwhile information. I agree that the future is a migration towards Internet streaming via Roku or similar devices. As that happens cable television will be perceived as the transitional technology its been and we can all watch it sunset off as more actual choice comes into our homes. ---
**Author:** ![madsircool](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/madsircool/32/3432_2.png) [@madsircool](https://boards.straightdope.com/u/madsircool)\ **Post date:** [August 14, 2013, 2:43am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/23 "2013-08-14T02:43:08Z")
My issue with cable is that to get the product I want most, international footy/soccer, I have to shell almost $100 a month. The channels themselves cost the cable companies pennies each but I have to buy the digital tier plus to get them. Slacker also forgets that capita;osm is the worst economic system there is; except for all the others. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [August 14, 2013, 3:00am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/24 "2013-08-14T03:00:51Z")
> [@Honesty](#): > > Doesn’t the Constitution allow Congress to promote “the useful arts and sciences”? The “Constitution” consists of 7 Articles and 27 ratified Amendments. Which one do you think refers to “the useful arts and science”? Even if that were the case, I’m not sure that subsidizing a private entertainment company is what they had in mind. > [@SlackerInc](#): > > This “enslave” bit is OTT unless you are such a radical libertarian as to border on being an anarchist. Do you believe it is “enslavement” if your city council appropriates money for a mural or statue? What about if the city park has fancy landscaping, or the city uses an architectural firm to make the downtown public parking lot more aesthetically pleasing? Are those things only okay if every single taxpayer signs off? (Also: what **Honesty** said.) I’m mimicking Rands language. Her belief was that no one has the right to force you to make sacrifices for others. The city counsel could ask for donations to fund a park. But they can’t mandate you help pay for it. And at least a park is a public space that benefits the whole town (or detracts from it I suppose, if it’s full of hobos or something). And PBS runs mostly on donations. What’s the point in forcing people to pay for shows no one watches? ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [August 14, 2013, 3:05am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/25 "2013-08-14T03:05:35Z")
> [@SlackerInc](#): > > But chewing this over some more makes me think of another point which I think exposes the flaws in the short term thinking endemic in capitalism especially among companies that are publicly traded. Let’s say (just for the sake of argument) they did figure out that going to PPV and charging really high prices would double their profits, at least in the next five years or so. If they were publicly traded (rather than being owned by individuals or small consortiums as they currently tend to be), they would feel extremely heavy pressure from stockholders (who are mostly not in it for the long term) to do so. > > But of course there is a clear danger in this approach that could, over the long or even medium term, cook the golden goose. Even with that doubling of profits, their actual fan base would be greatly reduced (and a lot of former fans would grouse about how greedy they are, while other more casual fans would just be like “whoa, pricey–whatever, I’m out”). I expect there would be attrition in that fan base over the years as it became harder for casual fans to dip their toes in and get hooked. In fact, I think this may be exactly what happened with prizefighting (along with some social changes around head injuries, which can also be a factor in football). You’re talking more about forms of corporate ownership and organization than you are capitalism. Capitalism can be closely held private companies or even employee-owned enterprises. Even large publicly traded companies can theoretically be organized so that say, workers get seats on the board of directors and thus would have limited veto power over things like that. Capitalism is a flexible concept, and there are actually many, many investors who stay away from companies that have shown a history of short-sighted management. That’s one of the cornerstones of investing for a lot of value investors (especially Warren Buffett)–only putting your money in companies where managers have shown **sustained longterm increases in shareholder value**. If you look on the long term unwise short term profit boosters are easily seen for what they are. > [@](#): > > Why? If the government pays researchers to develop these drugs, and perhaps offers something like a “prize” (a big multimillion cash reward) for developing something truly lifesaving, why couldn’t that work just as well as an incentive? Then once it is discovered, it is priced based on its production and distribution costs, not on how much a greedy capitalist entity can squeeze out of desperate, dying individuals. This is one of those “put up or shut up” scenarios. By and large free market capitalism has actually produced most things like this and your proposed system hasn’t. Paying rewards to individual researchers also does not really make any sense. Modern drugs aren’t the result of a single researcher hitting a eureka moment. The free market system is fairly efficient in terms of how it directs pharmaceutical dollars–diseases that afflict the most people are the most aggressively targeted for research because they present the largest potential market. After that, diseases that are chronic but maybe don’t afflict as many people are also popular targets because there is a relatively stable and permanent customer base. Where the pharmaceutical companies really fail is the debilitating or deadly disease that don’t affect very many people. Lou Gehrig’s disease is a good example of a very rare and very terrible disease that hasn’t gotten much research dollars. They came out with one drug maybe a decade ago that has a minimal affect on the life expectancy of a patient with ALS and that’s been about it. And ALS is probably the most “famous” disease that fits this mold, so it’s received an outsized amount of attention. Instead of replacing the highly efficient pharmaceutical industry it’d make more sense to direct government research dollars towards the marginal cases like ALS **or** the more grand schemes like curing really broad-concept diseases that will probably require decades and decades of research. Cancer is a good example, it really probably can’t be cured “in general”, and it’ll always get tons of private pharmaceutical research because it’s a lucrative market. But, cancer research in general is still a good area for government funding because despite all the money made in the cancer space there are lots of marginal cases of cancers that get little attention and there is always good research to be done on general science relating to cancerous growths that perhaps don’t have a clear path to patentable drugs and thus aren’t part of day-to-day pharmaceutical company research. > [@](#): > > I really wonder if you read my OP carefully. I am _against_ unbundling. I am **pro** -bundling. Bundling is really only a result of the technological reality of how expensive it is to build cable networks and how much extra bandwidth cable companies basically had to fill (otherwise it’s wasted) on the first coax networks. Bundling creates very little value for society at large, this is evidenced by the fact that as the internet has gotten better and better at delivering media more and more people are cord cutting–especially younger generations. This demonstrates that free people have trended against bundling when given a choice. So bundling must then be seen as a societally undesirable side effect of cable technology and will ultimately fall into the dust bin of history. Since people move away from it when given choice, that’s all the evidence we need that it isn’t desirable. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [August 14, 2013, 3:34am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/26 "2013-08-14T03:34:04Z")
> [@Martin\_Hyde](#): > > Bundling creates very little value for society at large, this is evidenced by the fact that as the internet has gotten better and better at delivering media more and more people are cord cutting–especially younger generations. This demonstrates that free people have trended against bundling when given a choice. So bundling must then be seen as a societally undesirable side effect of cable technology and will ultimately fall into the dust bin of history. Since people move away from it when given choice, that’s all the evidence we need that it isn’t desirable. I disagree with your premise. Or maybe it is your conclusion. What I mean is that if we accept as true that “free people have trended against bundling when given a choice” (not sure if it is true or not, but let’s take it as a given for the moment), I do not believe that ipso facto, “bundling must then be seen as a societally undesirable side effect”. In fact, I believe (and this is a big part of my premise here) that collective effect of these individual “free choices” adds up to a worse deal for everyone (or at least for the majority). I submit that although it is not precisely the same as the tragedy of the commons, it is in the same ballpark. ---
**Author:** ![Age\_Quod\_Agis](https://avatars.discourse-cdn.com/v4/letter/a/d07c76/32.png) [@Age\_Quod\_Agis](https://boards.straightdope.com/u/Age_Quod_Agis)\ **Post date:** [August 14, 2013, 4:55am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/27 "2013-08-14T04:55:24Z")
> [@SlackerInc](#): > > But chewing this over some more makes me think of another point which I think exposes the flaws in the short term thinking endemic in capitalism especially among companies that are publicly traded. Let’s say (just for the sake of argument) they did figure out that going to PPV and charging really high prices would double their profits, at least in the next five years or so. If they were publicly traded (rather than being owned by individuals or small consortiums as they currently tend to be), they would feel extremely heavy pressure from stockholders (who are mostly not in it for the long term) to do so. > > But of course there is a clear danger in this approach that could, over the long or even medium term, cook the golden goose. Even with that doubling of profits, their actual fan base would be greatly reduced (and a lot of former fans would grouse about how greedy they are, while other more casual fans would just be like “whoa, pricey–whatever, I’m out”). I expect there would be attrition in that fan base over the years as it became harder for casual fans to dip their toes in and get hooked. In fact, I think this may be exactly what happened with prizefighting (along with some social changes around head injuries, which can also be a factor in football). Companies aren’t generally as short sighted as you seem to think. If they were, then one has to wonder why pharmaceutical companies keep spending so much money on researching new products, and why cable companies spend so much money upgrading their products. In the short term, they’d make much more money if they just completely cut out R&D and other overhead. But they don’t do that. Let’s look at one company and compare that to your theoretical example. [Here’s Pfizer’s 2012 financials (note: 121 page pdf file)](http://www.pfizer.com/files/annualreport/2012/financial/financial2012.pdf). On page 15, it shows that Pfizer had net income of $14.5 billion. However, their research and development was $7.87 billion. So if they cut out their R&D and went solely for short term profits, then they could increase their net profits by more than 50%. After all, even if that research and development paid off with a new drug tomorrow, average time for clinical tests and FDA approval is [about 8 years](http://www.pharmtech.com/pharmtech/article/articleDetail.jsp?id=574805). And yet, despite having shareholders, they don’t do that. The fact of the matter is that companies generally do not favor short term profits over long term profits. They’re (generally) rational, which means they want to make the most money over the short and long term. Would you rather make $10 million per year for 5 years, or $5 million per year for 30 years? Most people – and most companies – choose the latter. > [@SlackerInc](#): > > Why? If the government pays researchers to develop these drugs, and perhaps offers something like a “prize” (a big multimillion cash reward) for developing something truly lifesaving, why couldn’t that work just as well as an incentive? Then once it is discovered, it is priced based on its production and distribution costs, not on how much a greedy capitalist entity can squeeze out of desperate, dying individuals. What makes you think that a few people in government would make better choices about how to award “prizes” than millions of people’s collective decisions? History seems to indicate that they don’t. This is probably because the economy is really, really big. It’s too big for a few people to be able to make accurate decisions about prices and incentives. The better method is (generally) to allow people to make their own decisions about how to allocate their own money. Plus, who’s paying for the development costs? Taking a new drug through R&D, clinical trials, and FDA approval can take decades and costs millions of dollars. Is the government going to compensate everyone for their costs in developing products? What about the costs of developing products that don’t lead to effective drugs or get approved? Is the government going to pay for those empty wells, too? Why would a few people in government do a better job of allocating resources than many people in business? In addition, if you put the government in charge of production, it has very little incentive to keep its production costs down. Government would have a monopoly. If production costs are high, they’ll charge more, and there’s no competition to threaten to take their business. So you’re not going to get the most efficient production, and production costs will probably be high and remain high. (By contrast, [Pfizer has to deal with competition from generic brands](http://online.wsj.com/article/SB10001424127887324809004578637471422939196.html), which provide them an incentive to keep production costs as low as possible.) > [@SlackerInc](#): > > I really wonder if you read my OP carefully. I am _against_ unbundling. I am **pro** -bundling. Sorry if I’ve been unclear. Here’s the statement I was responding to: > [@](#): > > That’s the beauty of this scenario: whichever side you are on, you can see an angle of how free market capitalism does not necessarily provide the most utility for the most people. I took that to mean that you think bundling does not provide the most utility for the most people. If you think bundling provides the most utility for the most people, then I’m not sure I understand what you were trying to say here. Did I misunderstand? If so, can you please explain what you meant? ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [August 14, 2013, 8:05am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/28 "2013-08-14T08:05:04Z")
I think if you reread my OP you will see that I clearly am pro-bundling within the constraints of the parameters we have to choose from. What I meant by the part you quoted is that even if you are on the other side of the bundling question, it still gives you reason to question the capitalist system’s ability to provide the most utility to the most people. ---
**Author:** ![aNewLeaf](https://avatars.discourse-cdn.com/v4/letter/a/ac91a4/32.png) [@aNewLeaf](https://boards.straightdope.com/u/aNewLeaf)\ **Post date:** [August 14, 2013, 11:48am UTC](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118/29 "2013-08-14T11:48:07Z")
> [@msmith537](#): > > The “Constitution” consists of 7 Articles and 27 ratified Amendments. Which one do you think refers to “the useful arts and science”? Article 1, Section 8, according to Wikipedia. [The Copyright Clause](http://en.wikipedia.org/wiki/Copyright_Clause). > [@](#): > > To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. [Previous page](https://boards.straightdope.com/t/cable-tv-exhibit-a-against-the-free-market/666118.md?page=1)