Your ABC for a mere $1.2 billion

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.

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18 Responses to Your ABC for a mere $1.2 billion

  1. steve

    Exterminate! Exterminate!

  2. blogstrop

    The public interest argument for the ABC is those news and current affairs shows that it runs that the private sector wouldn’t run.

    “Those news an current affairs shows that the private sector wouldn’t run” – I’d call them trash that nobody should run if they are interested in providing honest commentary – which, as you know, I regard as the bedrock of democracy.

  3. .

    What about the internet – in addition to on demand?

    The ABC is obsolete.

  4. Robert Crew

    Good article, Sinc. I know you wouldn’t have any input into the editor’s selection of pictures and captions to go with the article, but I thought the juxtaposition of a photo of Chris Lilley at the top, with a caption suggesting he provides “entertainment”, as a prime example of the interest group capture you describe.

    Chris Lilley is someone only the luvvies could love. For some reason I thought Chris had a long background in popular sketch comedy from pre-2005 that allowed him to sustain a career in what the yanks call “black comedy”, i.e. shows that you are told should be funny, but really aren’t funny at all, but I just read his IMDB page and found this isn’t the case, his one sketch comedy outing, Big Bite, was all pan and no flash – kind of like his career since.

  5. Bruce of Newcastle

    That was a fine read Prof Davidson.

    Unfortunately it did not address the point. Half of the electorate are absolutely peachy about public funding of the ABC, government companies and subsidies.

    The other half are not, and resent being oppressed to fund these parasitic organisms which suck on their taxes whether they like it or not.

    In Egypt, the Muslim Brotherhood learned a painful lesson recently that democracy is not impunity. It is government by a transient majority with the blessing of a loyal opposition.

    I think the left ensconced in the ABC, union featherbeds and government jobs around the country have not understood this. When the money runs out, as at GM Holden, they will get a rude shock.

    Also I doubt the usual denizen of The Conversation will have understood any of what you wrote. So far the comments are as expected…we like both kinds of music here in the ABC anal appreciation society.

  6. Dave of Cossack

    They run a service that is obsolete so should be terminated.

    The ABC is being run by sick left wing people who do not give a stuff about Australia and our economy.

    This means their reporters and presenters are naive and have no ethics as well.

    Here all we get is poor bugger me Gurindgi crap or how mining is ruining Australia which means human being do not listen to their crap.

    They are determined to warp peoples thinking?

    Now Christmas is upon us most “local” ABC is toning down so their staff can spend a well earned break with taxpayers money which includes bonuses.

    It all boils down to the most inhumane, bias mob of wankers ever to spread Labor and Green propaganda at the expense of us taxpayers.

    Before I forget tonight: this sick mob they had an appeal to finance Syrian warlords. But but none for the devastation caused our bushfires in NSW lately and the saddest of things-the destruction by Haiyan in the the Philippines.

  7. boy on a bike

    The public interest argument for the ABC is those news and current affairs shows that it runs that the private sector wouldn’t run.

    If there is only room in the market for one such show, how will we know that the private sector wouldn’t run it if the state broadcaster has already grabbed that spot for itself?

  8. Andrew

    this sick mob they had an appeal to finance Syrian warlords. But but none for the devastation caused our bushfires in NSW lately and the saddest of things-the destruction by Haiyan in the the Philippines.

    Not true. They did have an appeal for PH. The GreenBC campaigned for that ridiculous scam in Warsaw where every natural disaster would be denoted a “climate change” event, and the developed world would pay reparations. Plus the other one where we pay $1tr to them to be spent on “clean energy” scams (after the usual 50% surcharge to the govt and associates.)

    Even The Kenyan saw through that one, that’s how abhorrently corrupt the proposal was. Didn’t stop the GBC from smearing Abbott666 for not attending in person, not bending over and taking every demand for more money, and sending people who ate snacks and went to bed after 20 hours rather than “take it seriously.”

  9. Kingsley

    I think politically the way to make this point is opportunity cost. Ie what would the various children’s hospitals around the country have done with the $1.2 billion year in year out
    More research into children’s leukaemia or more episodes of Q&A?

  10. hzhousewife

    In Egypt, the Muslim Brotherhood learned a painful lesson recently that democracy is not impunity. It is government by a transient majority with the blessing of a loyal opposition.

    Very nicely said Bruce of Newcastle.

    Gee how I love the Cat, it is wonderful to stretch the brain and engage in the varied topics presented.

  11. Indigo

    Until recently, I had no idea that Jim Spigleman was such a leftie. As a long term Labor man, I don’t think we can get too excited about this “inquiry into bias”. Spigelman already said he didn’t think it was “systemic”, so prepare for a whitewash. The most we will get out of it is a few more conservatives being asked their opinion. The only person likely to be pulled into line is Fran “I’m an activist” Kelly who has to be the poster girl for the Green/Left/Progressive ABC.

  12. Denise

    In Denmark in 2007 – didn’t check if this was still true in 2013 – everyone has to pay a tax to the Lutheran church. Whilst the church is emptying because the preachers don’t bother to preach what the congregation wants, or what the congregation needs ie self-examination as to whether one is walking the talk, the church leaders have no incentive to change. It’s all free money. And my Christian son and his family have had to leave the church because of the ordination of homosexual priests, yet they still have to pay the tax.

    I’m a Christian but I believe that placing a tax on believers and non-believers is just piracy. I also believe that tax-exempt status – something that can be withdrawn if the message isn’t politically correct enough – on churches also takes away preachers’ motivation to preach without fear or favour. And they live higher on the hog than their congregation.

    How is any of this fair?

    The growing non-believers absolutely hate this impost and the state church too. Why should someone else subsidise my beliefs?

    Same with the ABC. It is after all a religious organization. With Gaia as the chief deity.

  13. .

    I had a lot of respect for Spigelman before this.

  14. cohenite

    Bruce of Newcastle raise an interesting and neglected point; simply put should a Western style democracy based on individual rights and freedoms accommodate people and groups whose individual intention is to subvert or destroy that Western style democratic structure and replace it, as the brotherhood proposed, with a non-democratic structure where individual rights are suppressed. Before Egypt there are not many examples where the authority suppressed a democratically elected group because that group was going to get rid of the democratic process; Algeria would be one, Mugabe would be another.

  15. Old Salt

    So the ABC is going to conduct an internal audit to identify the presence of leftist bias using an ex-BBC employee – what a farce!!

  16. Boambee John

    “The public interest argument for the ABC is those news and current affairs shows that it runs that the private sector wouldn’t run.”

    If the ABC we re to be closed down, as Tim Flummery’s climate Commission was, I suspect that we would see a similar phenomenon to the Flannery one. As TA (iirc) said at the time, “the gentleman seems quite prepared to give us his views for free”. In reality, he “crowd sourced” some money, so he is still plaguing us, but not for free, but the taxpayers aren’t paying.

    Similarly, should the ABC be defunded, the political obsessives who run its current affairs programs would continue to plague us, on other channels or lefty blog sites, we would not be deprived of the benefit of their wisdom (sarc).

    What is beyond parody is that the ABC, in a supposedly multicultural nation (a development strongly supported by the ABC), operates as a green-left monoculture.

    Even more so, it displays a colonial-cultural cringe by turning to Mother England for its reviewer.

    Bob Menzies must be laughing in his grave!

  17. Mrs Beardsley

    If the ABC was privatised, commercial channels would pick up commentators like Flannery and use it for comedy, ridicule and satire.

    I have lobbied for the defunding of the ABC, starting with the review as in the petition circulating now.

    I would urge readers to support the petition.

    I see Vitrioli did a half decent interview of Bill Shorten. Great Scott!

  18. Blott On The Landscape

    Lovely read

    Boiled down to I don’t like it so it should go. Oh what joy if we only had programming and news and current affairs that agreed with my viewpoint all the time.

    I for one am glad that there is a station that can at times be in bad taste, at other times thought provoking and funny. Especially the fact that one man cannot ring the station and pull something off the air because he doesn’t like it or refuse to show something because sponsors (advertisers) may not like it.

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