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What The Media Tell Americans About Free Enterprise

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September 1997


No Free Regulated Lunch
Reporters Point Out the Costs of Regulation

Viewers of television news could be forgiven for thinking that regulations are free. Network reporters rarely tell them of the costs they, as consumers, incur when the government places mandates on businesses.

An exception was the reporting late last month on increased gasoline prices. Two reporters, ABCís Lisa Stark and NBCís David Gregory, used their stories to inform viewers that state mandates were exaggerating the price hikes. Stark, on the August 29 World News Tonight, reported that "the different prices [in the different states] are a result of different state taxes and the expensive anti-pollution additives required in some states."

Gregory, on the same eveningís Nightly News, said, "Such high demand creates even greater sticker shock in California, where itís more difficult for oil companies to keep up the supply of reformulated, clean-burning gasoline mandated by the state."

Another exception was a recent CNN series on the many efforts across the country to deregulate electricity services. Correspondent Natalie Pawelski, on the September 1 World Today, said, "The theory is basic free enterprise. Competition should bring lower bills, better service, and innovation." She reported that "Congress is considering electricity deregulation and almost every state is making plans as well. If small pilot projects in New Hampshire and Massachusetts hold true on a larger scale, deregulation will mean lower electric bills."

According to Pawelski, the "biggest boulders in the road to deregulation are white-elephant nuclear plants and other big-ticket items that were approved by regulators, but wonít make economic sense in a competitive market."

She ran a soundbite from two sources who argued that taxpayers shouldnít have to pay for these "stranded costs." Adam Thierer of the Heritage Foundation, said, "A stranded-cost bailout would represent potentially the most egregious example of corporate welfare in American history." And Anna Aurillo of U.S. PIRG argued that "it is an outrageous insurance for their gambles that did not pay off."

Three days later Pawelski profiled Bristol, Virginia, which recently broke its ties to the Tennessee Valley Authority. "Bristol, Virginia is going through a divorce of sorts," she said. "Itís breaking away from the mighty Tennessee Valley Authority, the giant federal agency thatís powered this town, and dozens of others, for more than half a century."

She called the TVA "a monopoly that doesnít like the idea of Bristolís turning to Cinergy," an Ohio company that Bristol figures "will save the town at least $70 million over the next ten years. Thatís about $3,800 per resident."

Kudos to ABCís Lisa Stark, NBCís David Gregory, and CNNís Natalie Pawelski for pointing out that regulations arenít cheap, and deregulation can mean a windfall for consumers.


ó Rich Noyes


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