Markets Learn, Governments Don't

Back in the housing bubble, the Community Reinvestment act required banks to meet community needs as a prerequisite for obtaining merger approvals from federal bank regulators, and by giving consumer and community groups the right to challenge these approvals the CRA provided these groups with leverage to bring banks to the negotiating table. Within a decade after the CRA was enacted, many banks created separate "community reinvestment" divisions that were often staffed by liberal individuals who sympathiszed with the aims of the community reeinventment movement. Indeed, some of these individuals had themselves been cummunity activitists who were recruited by banks to serve as liaisons with community groups. Activists pressured banks to invest more money in specific urban neighborhoods. Banks forged partnerships with community development corporations. See an Urban Studies professor's fawning praise for this result back in 2003 when it seemed like the model of good governmental activism.

The result was a disaster. Not that this was a sufficient condition, but it surely contributed to the debacle in a bad way. The lesson is yet another example of the law of unintended consequences. Trying to do good via indirect methods is very dangerous because the economy is a complex system, and when bad things happen as they often do, there's no accountability, no one in the political system got booted out of office for championing NINJA loans, while investors took it on the chin.

So I found the Federal Communications Commission's press release approving the Comcast's acquisition/merger of NBC Universal as just more of the same:

As part of the merger, Comcast-NBCU will be required to take affirmative steps to foster competition in the video marketplace...Comcast will make available to approximately 2.5 million low income households: (i) high-speed Internet access service for less than $10 per month; (ii) personal computers, netbooks, or other computer equipment at a purchase price below $150...we require Comcast-NBCU to increase programming diversity by expanding its over the-air programming to the Spanish language-speaking community, and by making NBCU's Spanish-language broadcast programming available via Comcast's on demand and online platforms."

As Canada and Belgium know, encouraging language diversity is a bad thing, not a good one, as it doesn't help the minority language speakers, but merely adds to the resentment they feel and separates them further. There's nothing worse than government policy implemented via the back door like this, because it isn't free, it just adds to the already large amount of red tape that piles up on businesses.