I have an essay on government ownership in general and the ABC in particular up at The Conversation (please click through to read the whole thing).
What of organisations such as the ABC? Surely government ownership of the media provides a healthy balance to private interests? Well, that is one view.
The public interest theory of media ownership suggests state-owned media enterprise results in a better informed population as it promotes less biased and more complete information provision than the private sector would provide.
By contrast the public choice theory of media ownership suggests government ownership exists to allow political elites to divert resources to narrow interest groups or distort and manipulate information to benefit and entrench those elites.
Simeon Djankov, Caralee McLiesh, Tatiana Nenova, and Andrei Shleifer untangle those two theories using data from 97 countries (including Australia). They conclude the evidence tends to support the public choice interpretation over public interest explanations for government ownership.
This, of course, will come as a shock to an Australian audience. After all we keep hearing that a large percentage of the population believe the ABC provides a valuable service. It isn’t clear, however, what that actually means – a large percentage of the population doesn’t actually consume the ABC’s output. I think the steady stream of UK television re-runs has been very valuable. In a world of box DVD sets, and pay-on-demand video, that value will diminish somewhat over time.
The ABC fails Adam Smith’s test. To be sure, it isn’t profitable – but that is by choice, not an inherent feature of the business itself. Many of the ABC’s competitors are profitable. So here is the thing; the ABC does not provide many services the private sector couldn’t provide. But it does provide those services at a cost of some A$1.2 billion to the taxpayer.
The public interest argument for the ABC is those news and current affairs shows that it runs that the private sector wouldn’t run. The overwhelming majority of ABC activities are simply more-of-the-same activities that the private sector does just as well, and probably better. The government simply has no business in providing entertainment to the masses (or tiny elites in the case of the ABC). A review of the ABC would have to ask the question as to what exactly the public interest argument for the ABC is, and whether that is worth A$1.2 billion.
Government provision of goods and services is always likely to be captured by narrow interest groups. Service standards, however, have not increased in line with the volume of public funds that get poured into these areas. Government businesses simply do not make stuff people want to buy. These are not bugs, but rather a feature of government intervention.