PRA is not equitable regulation

Posted on 10. Aug, 2010 by in Blog, Commentary

The global recession, the housing crisis, the collapse of Wall Street…what have our lawmakers learned from our current situation?

For one thing, as recent actions show, they have taken the stance that good business requires transparency and sound, equitable regulation.

However, the operative word here is equitable. As Rob Smith of Bacon’s Rebellion points out in an article last week:

When regulations hit some companies more severely than others, for no discernable reason, the policy inevitably causes more problems than it solves.

The Performance Rights Act, passed through committee in both the House and the Senate, is just such policy. By tinkering with the existing royalty structure that has been governing the radio broadcaster/record label relationship for decades, Congress would be forcing one industry to subsidize another, simply because that industry has been unable to maintain its profitability in the new, digital era. As Smith wisely points out:

To compel this through government action would represent a transfer of profits from one industry to another that would result in economic hardships for the broadcasting industry.

Neither the Administration nor Congress wants big business to interfere with government, but the PRA makes no bones about interfering in business. The unfortunate fact, as Smith reasons, is that “political intervention in the economy always carries with it unintended consequences.” The unintended consequences of the PRA wouldn’t be just multi-billion dollar industry players. The unintended consequence would be demise of the small, local businesses (here radio stations) that Congress should be supporting in an uncertain economic time. The PRA chooses the health of one industry over another, to the detriment of local jobs and communities.

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