By Doug Farmer —
Here is an admission. We don’t have cable. There is no principle behind that lifelong fact, no noble intention. We just never made the decision to get cable. When we were first married nearly five decades ago, we could get two of the three networks with the “rabbit ears,” and that was enough. Later, with an outdoor antenna, we got NBC from Eau Claire. We really had to want to watch; the reception brought static as often as not.
I would like to tell you we saved a lot of money, 47 years at $50-75 per month on average would mean $28,000 to $42,000 never spent, not to mention the theoretical interest earned. Except every time our marriage had a madcap idea, we both would announce (with considerable enthusiasm) that we could spend the “cable money.” So it’s quite possible nothing was ever saved.
I was reminded in the recent election that the only cause I have never heard a politician advocate for was making cable affordable for all. Every other societal need is advocated for, even universal access to the internet. Not to diminish anybody’s favorite cause, but more than one teacher asked how we could have children without access to the Discovery Channel.
Think how things would be different if the government had made cable universally accessible. The subsidy would be modest, but the argument would run that the benefits of an earlier and better education would far outweigh the costs. And, just like that, we would have had universal cable.
But cable never would have cost less, even with a generous government subsidy. Regrettably, and a sad fact of life, the only control on prices is people’s unwillingness or inability to pay the price. The provider, whether it be cable or something else, has to make the price attractive, either by delivering more product, better product or reducing the price. That’s it. That simple. The minute the government offers a subsidy there is “slack” in that equation, quickly absorbed by the provider. In the final analysis, it is not the consumer or buyer who benefits, but always the provider or seller.
At the start of the last recession the government offered assistance to first-time homebuyers. Studies reveal the assistance was quickly absorbed by higher sales prices once the buyers were freed from normal constraints. When the program ended, prices tumbled.
My father’s generation did literally work their way through college waiting tables, actually paying for all of their tuition as they went through school. The student loan programs of the last 50 years have mirrored a dramatic increase in college tuitions once the buyers, the students, were freed from normal constraints and price no longer mattered.
As a contrast, the normal constraint on cable prices is the buyer’s unwillingness or inability to pay that price. Consequently, cable remains a comparative bargain, one not inflated by a supposed discount or government subsidy.
Our society talks of cutting the cord, but it is our dependency on government subsidies that should be cut. The subsidies that flow straight through the consumer directly to the pockets of the seller. A sweet gig.
Doug Farmer has worked at Park Bank since 1981 and spent 15 years on the State of Wisconsin Banking Review Board. He’s lived in La Crosse since 1971. You can reach him at email@example.com.
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