HDTV: a better buggy whip - argument against federal subsidies of high-definition television research

National Review, July 14, 1989

COMMERCE SECRETARY Robert Mosbacher has got off to a shaky start, giving speeches that suggest grandiose projects to funnel government money to pet industries. It all sounds surprisingly similar to the sort of "industrial policy" advice Michael Dukakis used to get from enthusiasts for mega-government, such as Robert Reich, Barry Bluestone, and Lester Thurow. As the Wall Street Journal reported, "Each new pronouncement by the [Commerce] Secretary sets trade group and corporation lobbyists scampering like children around a parent coming home with Christmas presents." The American Electronics Association (AEA) quickly scampered in hopes of getting at least $1.35 billion in government loans, grants, and loan guarantees to develop high-definition television (HDTV). The AEA knows what it's doing: once the government got in that deep, it would be too embarrassing not to provide as much more money as needed to keep the patient alive. Industry analysts, noted the Financial Times, "fear that HDTV would require government support well beyond that proposed in the industry plan."

If HDTV is such a promising idea, why does it need all these government subsidies? Picture quality will undoubtedly be better than on conventional television, but that doesn't ensure that consumers will feel the difference is worth the higher price. Computer monitors with so-called VGA color graphics likewise produce a much better picture than monochrome or CGA. monitors, and also a much better picture than television (which could easily be displayed on such computer monitors). Yet the technically inferior monitors far outsell the VGA models, obviously because of price. The only company in the world that even claims to have a shot at producing HDTV at a reasonable price is an obscure little U.S. firm, Summa Medical, whose stock has soared because of patents, not subsidies.

George Gilder makes a persuasive argument that the whole idea of broadcast television, whether high definition or not, is rapidly being made obsolescent by the prospect of telecomputers. Extremely high picture quality is already available for computers at a fairly modest cost. And the digital technology of computers can handle far more information than the analogue methods of conventional television, which is also why compact discs are rapidly displacing records in the music business. To use taxpayer money to underwrite analogue television is about as useful as offering government subsidies to firms making high-quality record turntables. Digital telecomputers, on the other hand, could combine in one unit far more possibilities than today's best televisions and computers can handle separately, including new forms of interactive television (such as games, polls, and shopping) through networks of fiber-optic cables. Broadcast frequencies now used for television would then be freed for more valuable uses, such as air-traffic control, cellular telephones, and modems. No subsidies needed, thank you, since U.S. industry is already investing its own money in telecomputers and fiber optics.

Governments throughout the world have a dismal record of picking future technologies. The tendency of politicians and bureaucrats is instead to concentrate on the present, particularly on existing big businesses that prefer to invest in influencing government rather than in adapting to the future. (The new upstart industries, with few employees and better uses for their cash than lobbying or providing campaign funds, have far less political clout.) Even the Soviet Union is beginning to notice that all its government technological "plans" are leaving it further and further behind countries that permit the entrepreneurial incentives of free markets to function. Yet the U.S. spokesmen for "industrial policy" think their plans will somehow be superior to those of, say, Stalin. HDTV is beginning to look like the 1980s, equivalent of the 1970s subsidies for Synfuels and windmill farms-just another expensive white elephant.