The BBC is renowned for its educational programming, but its most valuable lesson is being presented on a global stage right now. The BBC is facing backlash for doing away with a universal beneft for the elderly and, in the process, teaching an audience of millions how government programs really work.
The BBC is severely restricting a benefit that pensioners have come to rely on: free TV licenses. The main beneficiary of this decision is BBC executives.
Artistic license
The BBC draws the lion's share of its budget from an annual license fee paid by everyone who watches or records live television – even if the consumer never views one minute of BBC programming. The licenses cost £154.50 ($195.25) for a color TV or £52 ($66) for black-and-white. “Evaders” caught by government “detection” (surveillance) equipment watching or recording TV without a license pay a fee of up to £1,000.
There's a word for what the BBC did: rationing. Even children's programming is now rated Restricted among mature audiences.
In 1999, then-Chancellor Gordon Brown rolled out a new entitlement: The government would pay the license fee for every citizen over the age of 75. But in 2015, Prime Minister George Osborne announced that the government would stop bankrolling the program out of a separate fund in 2020. Starting next year, the BBC will have to finance the licenses out of its own budget.
The broadcaster argues that the government handed over “responsibility” carte blanche, allowing the BBC to rewrite the regulation. And it has done just that.
The BBC announced this week that the benefit will now be means-tested, and only the elderly who receive pension-credit, a government program for poor older citizens, will get a free license. That eliminates approximately two-thirds of recipients, or 3.7 million elderly Brits.
Rated R for rationing
There's a word for what the BBC did: rationing. Even children's programming is now rated Restricted among mature audiences. And restricting benefits is inevitable in any government-subsidized program.
Politicians invariably promise “free” goods and services to voters. But thanks to scarcity of resources and unlimited demand, choices must be made. As Margaret Thatcher famously said, “The problem with socialism is that eventually you run out of other people's money.” And following the typical path of government benefits, the BBC's license fee decision favors the powerful and connected at the expense of much more vulnerable populations.
The broadcaster could not have been more explicit: It wants to reserve its budget for the entertainment industry, one of the most elite and economically prosperous segments of any economy. The Guardian reports:
The corporation argued that the £745m annual cost of maintaining the status quo would have taken up a fifth of its budget, equal to the total amount it spends on all of BBC Two, BBC Three, BBC Four, the BBC News channel, CBBC and CBeebies. The BBC estimates that the new proposal will cost it £250m a year, requiring some cuts but no channel closures.
Network executives would prefer that the elderly – who make up the core of BBC One viewers – get fined than for the BBC to stop branching out into separate niche markets, to compete with private networks.
The government must assure its actions benefit society without assuming functions better handled by the free market. That's why it should consider restructuring the BBC and abolishing the license fee altogether.
In a much softer form, this calls to mind the fate of the beloved horse Boxer in George Orwell's Animal Farm (the 1954 animated version of which was produced by a British production company and which, coincidentally, is currently not available on the BBC iPlayer).
Boxer's response to every production quota set by dictator Napoleon is “I will work harder.” But when he claims the generous retirement benefits his leaders promised, Napoleon sells him to the glue factory. In a heartbreaking passage, the steed – his energy spent from a lifetime of manual labor for others – lacks the power to kick out of his prison and coasts away exhausted to his death. The pigs (the Politburo) throw a celebration for themselves, putatively in Boxer's honor:
On the day appointed for the banquet, a grocer's van drove up from Willingdon and delivered a large woodencrate at the farmhouse. That night there was the sound of uproarious singing, which was followed by what sounded like a violent quarrel and ended at about eleven o'clock with a tremendous crash of glass. No one stirred in the farmhouse before noon on the following day, and the word went round that from somewhere orother the pigs had acquired the money to buy themselves another case of whisky.
When administrators are tasked with allocating scarce resources, they always put themselves at the front of the line.
Make no mistake: Means-testing government programs is prudent. The government must assure its actions benefit society without assuming functions better handled by the free market. That's why it should consider restructuring the BBC and abolishing the license fee altogether.
“[W]e find ourselves in a very different world from the early post-war period when an annual tax-like TV licence for a monopoly public service broadcaster made sense,” explained Ryan Bourne of the Institute of Economic Affairs. “TV broadcasting then had the features of what economists call a public good – it was non-rivalrous and non-excludable.” In those days there were no competitors; free riders could not be strained out and did not prevent others from watching.
Today, these conditions no longer apply. “There are over 500 free-to-air channels providing the kind of content that would, if produced by the BBC, be defined as meeting public service obligations,” writes Acton transatlantic contributor Philip Booth. “There should be no state broadcaster or involvement in broadcasting any more than there should be a state book publisher.”
Nonetheless, the BBC continues to enjoy state privileges, exclusive funding, and an easier path to branch out and compete with other networks.
The British people have made their indignation known, to no avail. Some 126,000 UK citizens petitioned Parliament to abolish the license fee during the Coalition government (2015-2017). Rather than taking their concerns seriously, during debate Welsh Labour MP Kevin Brennan sacrilegiously dedicated the words of the Welsh hymn “Guide Me O Thou Great Redeemer” to the BBC: “Songs of praises, songs of praises I will ever give to thee.”
Unlike the real God, the BBC's generosity ends where its liability for others begins. Those who administer public benefits unfailingly accrue wealth and power in their own hands, even if it means taking them from the weak. It is indeed a redistribution of wealth, not from the rich to the poor, but from the marginalized to the powerful.
The world owes the BBC a tremendous debt for the truths we are learning from this episode.
(Photo credit: Elliott Brown. This photo has been cropped. CC BY 2.0.)
