Rupert Murdoch, Government Censure, and Free Markets

A parliamentary committee in the UK has decided, in the wake of the phone-hacking scandal, that media baron Rupert Murdoch is “not a fit person to exercise the stewardship of a major international company.”

This is not exactly good news for Murdoch, but nor is it catastrophic. The parliamentary committee that chastised him has no real power, and certainly not the power to act on its assertion that Murdoch is unfit to run a company.

The power to make that determination, and hence in principle to hobble the UK branch of Murdoch’s media empire, is “Ofcom”, the UK’s Office of Communications, a regulatory agency set up by, but arm’s-length from, the UK government. According to the Washington Post, “The independent agency has the power to take a TV license away from anyone deemed ‘unfit’ to hold one.”

But assertions by a parliamentary committee that a corporate leader is unfit should give us all pause — not to contemplate the fate of the accused, but to contemplate the larger question of governments telling us who is fit to be in business. Trust me, I have no particular sympathy for Rupert Murdoch, but I also think it’s a very good thing that the committee wagging its collective finger at him has no teeth.

One of the virtues of free markets is that governments don’t generally play a role in deciding who gets to be an entrepreneur or who gets to run a corporation. A corporation is a piece of private property, albeit a rather complex and unusual kind of private property. In small organizations, you get to be chief by starting the business yourself; in larger ones, you get hired by the shareholders or (as in the case of cooperatives) by the employees or customers who own the thing.

Contrast this to a communist or feudal system under which an aspiring entrepreneur has to grovel at the feet of some bureaucrat or feudal lord just to be granted the privilege of starting a business and supplying his or her fellow citizens with the products they want and need. Under such a system, you only get to be head of a large, productive organization if government officials give you the nod. Now of course, some people won’t see that as such a bad thing. If you see a corporation as primarily a public institution — one whose goals ought to be public ones — then perhaps you also think its leaders ought to be chosen by (or at least subject to veto by) representatives of the public.

But consider: the committee mentioned above was composed of members of two different political parties. The report the committee issued was approved by a 6 to 4 vote, a vote that divided the committee along party lines. So before you give a hearty cheer for this instance of government censure, remember that under a different system such censure might have teeth, and such a committee could easily be dominated by a party other than the one you prefer.

4 comments so far

  1. lukechircop on

    I have always found the intersection of media and politics fascinating. They say the media doesn’t tell people what to think, but it does tell them what to think about. Murdoch’s vast media empire gives him unparalleled control of setting political agenda – a power which should arguably be endowed upon no one man. Relating back to your post, I think the media is so interesting because it is privatised, yet so public at the same time. Perhaps it needs its own standards and rules of operation. At any rate, I don’t think we can allow for the exploitation by giving any individual such large control – disperse the ownership, share the voice, and privatised business models and rules will be more effective for media organisations.

  2. Duncan on

    Remember that the purpose of this report was to decide if certain executives of NI had misled Parliament. The conclusion was that they had. That is significant for the terms under which broadcast licenses are issued here in the UK (and I’d imagine in the US and Canada too). If someone could mislead in one sphere, then they could mislead in another sphere.

    I absolutely agree that business people should be free to set up their own companies and get elected onto boards, without the interference of government. That’s how it works here in the UK, as well as, I’d imagine, in the US and Canada too. What they don’t have the freedom to do is act outside of the law, or to present evidence to Parliament in ways that seem to cover up such wrongdoing.

    If an issue arises that causes great public concern (and this is one of them for the UK), then I think it’s right for Parliament to be able to call people (be they in business, academia or any other sphere) to give evidence in relation to those concerns. It’s also right for such committees to be at a distance politically from decisions around broadcasting licences. That not’s the same as them being powerless.

    Remember that the committee voted unanimously on the key issue – that they have been misled by NI executives – the split was only around how serious a ‘fit and proper’ conclusion to drawn from being misled. Differences of opinions are not weaknesses.

    While the hacking of Milly Dowler’s phone is an important event in this saga and while it was a truly seismic revelation, it is now about much more than phone hacking – there are several police investigations going on now.

    • lukechircop on

      You raise some good points. A private enterprise in most legal instances is considered a ‘person’. They should be treated as such and investigated to the same lengths as any individual person who hacks a phone on a large scale would.

    • Chris MacDonald on

      Duncan:

      Thanks for your comment. I agree with all that. I think the processes available to your Parliament (and ours) seem about right. I just want to highlight the fact that it’s one of the virtues of our (shared) system that such committees have the power to investigate and to exhort, but not to punish — that power rightly belongs to the courts and the relevant regulatory agencies.


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