The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

The Pro-Competitive Policies of the 1970s


In an excellent review of Susan Crawford’s Captive Audience, Tim Lee of Ars Technica draws an underappreciated distinction:

Crawford’s framing of the debate—between the pro-regulatory stance of the 1930s and the anti-regulatory stance of the 2000s—ignores a third option: the pro-competitive policies of the 1970s.

In 1968, the FCC forced AT&T to allow third parties to attach devices to the network, creating a market for answering machines, cordless phones, modems, and much more. In the 1970s, the FCC allowed MCI to enter the long distance market. And in 1974, the Ford administration began antitrust proceedings that would lead to the monopolist’s breakup in 1984. The result was flourishing markets for long distance service, answering machines, cordless phones, and online services. And crucially, the FCC avoided heavily regulating these relatively competitive markets, resulting in a rapid pace of innovation.

In other words, the key principle of the 1970s reforms was that monopolies should be regulated while competitive markets should not be. And this is a principle neither Crawford nor modern conservatives seem to understand. Crawford seems to regard the competitive sectors of today’s economy as just as dysfunctional, and in need of regulation, as the monopolistic sectors. Conservatives make the opposite mistake, reflexively opposing regulation no matter how concentrated an industry becomes.

And so, Tim concludes, we’re left with a counterproductive debate between the abstractions of “free markets” and “regulation,” all the while neglecting that the real question is how and how much we ought to regulate different sectors. He argues that while constraining monopolies makes sense, heavy-handed intervention in competitive sectors does not.


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