They Win: Institutions, Not Ideology, Dominate Our World
They are winning. They are in charge. But who is They? It’s not the Democrats--they have lost the House, probably for many years to come, and they could well lose the Senate this November. And Barack Obama is a very lame duck; does anybody think he personally controls much of anything? Indeed, polls show that if the 2012 presidential were done over, Mitt Romney would defeat him.
But the Republicans aren’t winning, either. Looking ahead to 2016, the polls show that Hillary Clinton is comfortably ahead of all the possible GOP presidential hopefuls. And in the meantime, many activist conservatives maintain that if Congressional Republicans give way to the Democrats on a “clean” debt ceiling bill, then they, too, aren’t much of a force.
We have divided government--neither party enjoys much public confidence. Such division has been the dominant pattern of the last three decades: Since 1984, one party has controlled the White House and both chambers of Congress for just eight of those 30 years; in the other 22 years, power has been split. Indeed, the status quo can be described as a “vetocracy”; both parties have the power to veto everything, and so nobody really runs anything.
So if not the politicians and their parties, who’s in charge? Who’s the They? Here’s an answer: They is the system itself, including its operators. That is, the permanent apparatus of power-players who carry on--indeed, flourish--when politics are gridlocked. When elected officials can’t do anything, un-elected officials will happily step in. Power is never wasted, it simply goes into the hands of those who can wield it--and They can, even if politicians can’t.
So who's an example of They? We might consider, for example, the cable giant Comcast, which just announced its $45 billion acquisition of Time Warner Cable. Comcast, it will be remembered, bought a majority share of NBC-Universal in 2009 and bought the rest of the company in 2013. Yes, Rachel Maddow and all the rest of them at MSNC are now 100-percent owned by Comcast.
Now, for this latest acquisition, Comcast is ready on all fronts. Sure, the company is making all the usual arguments about the purchase being good for consumers, etc., etc. Yet for the most part, it’s just gathering up its political throw-weight--as they say, quantity has its own kind of quality. One headline in Politico, the daily devotional of the Beltway, reads, “Comcast readies for Washington war.” The article notes that Comcast spent $20 million lobbying Congress last year; it has also given $1.7 million this cycle to Congressional re-election efforts on both sides of the aisle. And oh yes, the company’s executive vice president, David Cohen, bundled $500,000 for Obama's re-election campaign. In other words, Comcast’s point of view will receive a respectful hearing all over town.
It’s all legal, and who knows--maybe the acquisition is a good idea. Yet the merits of Comcast’s argument aren’t really the issue: This is a question of muscle, not right and wrong. It’s simply a case-study in how the power-game is played in DC. So the takeaway, here, is that it’s happening; the business deal is going forward, even as DC is gridlocked on just about everything else. You see, Democrats and Republicans must have their tussles: Each D, and each R, wants the folks back home to know that yes, indeed, elected officials are fighting for them. Meanwhile, back in DC, They have their work to do, and They get it done.
And so while consumer groups and a few gadflies will be protesting the Comcast acquisition--and many cable customers will silently seethe--few DC observers think that regulators will block the purchase.
Indeed, biggest single reason to bet on Comcast is its strong track record. For decades now, Comcast has been making acquistions, all across the country, under the political reign of both parties. So why should the success-streak stop now? As Comcast Chairman and CEO Brian Roberts told CNBC about this latest acquisition, “We wouldn't have done it if we didn’t think [we would win].” Oh, by the way, Comcast owns CNBC.
A headline in The New York Times speaks to this inexorability factor: “Industry Shifts May Aid Comcast in Takeover Bid.” And what shifts are those? Mostly, it’s the shift toward consolidation; for decades, the cable companies have been seeking greater economies of scale--and getting them. So today, Comcast is the #1 cable provider, and Time-Warner is the #2, so why shouldn’t they get bigger together?
Speaking of getting bigger, here’s another headline in The New York Times: “A Bigger Comcast May Beget More Deals":
Companies that own cable networks may feel the need to get bigger to better negotiate their fees with a cable operator that could have seven times as many subscribers as its nearest rival. Other cable operators like Charter, Cox and Cablevision could try to consolidate as well. And local television station groups, constrained by decades-old regulations that limit their growth, could be squeezed by a newly enlarged Comcast.
In other words, if the carriers get bigger, then the content-providers have to get bigger. Everyone has to get bigger. Except, of course, for the customers--they should stay the same size.
Yet for all these mergers--past, present, and, likely, future--the biggest shift seems to be within each company in the media industry. That shift is the accelerating quest to extract more value from the data of each customer. As Advertising Age points out,
One of the biggest obstacles to ad targeting at the household level has been a lack of broad reach, which makes running campaigns across multiple operators a clumsy and inefficient effort. The merger should eventually help expand the addressable universe to the kind of scale that advertisers desire and speed up advances in areas such as dynamic ad insertion.
And increasingly, Comcast will have the data to make addressable smarter. With about 30 million set-top boxes, it will have an even bigger trove of ratings information, viewing habits and personal data. Combined with marketers' own data, that will help planners and buyers laser focus their media selections.
So yes, Comcast loves its cable fees, but it also loves Big Data.
Does all this sound a little ominous? Maybe. But it’s nothing new. Comcast simply wants to get deeper into the turf already occupied by Google, Facebook, and the credit-card companies--and everyone else with access to your digitals. Those folks, all together, are They with a capital “T.” No matter who wins or loses in 2014, or 2016, They will still be in power, learning all about you.
Some will say that this is simply the free market at work. After all, nobody makes you buy cable at any price, or an internet connection.
Of course, nobody makes you buy electricity, either; we’re all free to live off the grid. Yet not many choose that way. And so over the last century or more, the practicalities of modern life have led Americans to accept three realities: first, certain utility services are essential; second, utilities tend to be what economists call “natural monopolies”; third, regulation is needed to keep said monopolists from abusing their power.
As a result of those three realities, we came to accept an alphabet soup of three-letter regulatory agencies, including the FCC and numerous PUCs at the state level. Each acronymic outfit is its own self-sustaining bureaucracy, speaking impenetrable legalistic jargon, surrounded by a quantum cloud of lobbyists and pressure-artists.
To be sure, such regulatory sausage-making is not popular. On the left, critics often see these regulatory agencies as hopelessly captured by industry, as the revolving door shuffles former regulators into good jobs with the regulatees. And on the right, critics often see… the same thing. Meanwhile, in the middle, most folks don’t pay much attention to regulatory proceedings; they just know that a slightly scary, somewhat absurd--and highly profitable, at least for a few--Kafka scenario is playing out every day in DC, as well as in other capitals, from Boise to Brussels.
Yet it’s hard to see any alternative to regulation; we have learned, the hard way, that laissez-faire deregulation doesn’t work. Back in 2000 and 2001, for example, the Democratic governor of California, Gray Davis, teamed up with the Democratic-controlled state legislature to deregulate electricity. Yet in spite of libertarian high hopes, the result was catastrophe--the Golden State became the Brownout State. The deregulation, we might recall, was quickly re-regulated out of existence.
In other words, there’s no escape from Big Regulation.
And as for the rest of us? Well, we just watch--as They do their work.
Oh, and by the way, it’s worth remembering that They consists of a lot more than the cable operators and the FCC. The category of “They” also includes a lot of other acronyms, including IRS, NSA, CIA, ATF, and so on.
Nearly a century ago, the poet T.S. Eliot wrote, “I will show you fear in a handful of dust.” Well, in our time, we can see fear in handfuls of three little letters.
Next: The Man Who Saw It Coming