Genius on Hold (2012) is a libertarian-friendly documentary on the life of Walter Shaw, a gifted telecommunications inventor with a ninth grade education. Genius on Hold makes a clear-cut case for how government regulation hurts people. It’s a great libertarian documentary with, sadly, an incongruent progressive puff piece tacked onto the end.
Walter Shaw invented telecom essentials such as conference calling, call forwarding and speakerphones, among others. He worked as a lowly lineman for the Bell System when it had a government-granted (and Department-of-Defense-supported) monopoly on telephone communications in the United States. According to the documentary, he shared his inventions with his superiors and was promoted.
But eventually, they wanted him to stop coming up with all of these pesky innovations. They tried kicking him upstairs to a prestigious position without responsibility. They tried getting him to sign over all of his inventions to Bell. But he refused, telling them they could not own his mind. Finally, he left Bell and tried to bring the speakerphone to market on his own.
Driven into Poverty by the Bell Monopoly
But this was when Bell considered non-Bell-produced telephones and other devices to be “foreign attachments.” Shaw needed Bell’s permission to connect his speakerphone to their phone lines. They refused. He and his family were driven into poverty. His two kids were sick with the measles at the same time and Shaw’s pockets were empty.
Banned from using his genius in the official while marketplace, Shaw developed a black box that permitted New York City mafia bookies to evade police harassment by using call forwarding long before Bell offered the now-ubiquitous service. The cops would raid the location from which the bookies’ betting phone calls originated, only to find that the bookies weren’t there! For several years, Shaw’s black box enables bookies across the US to protect their betting operations from police raids. This counter-economic (agorist) work enabled him to feed his family and indeed live well.
But this is a tragic story. Walter Shaw’s life was ruined by government regulation of the economy in the specific form of the fascist Bell telephone monopoly. Legal monopolies are protected by the government from competition. Without competition, why should a company want to innovate? With a legal monopoly, the focus is on preserving that government-granted trade advantage. Too much innovation too fast just rocks the boat, makes extra work and burns up profits that could otherwise be distributed to executives and shareholders.
Without competition, Shaw had nowhere else to take his talent and his inventions. He was essentially banned from making a living in his chosen line of work due to the government-granted Bell telephone monopoly.
Government Regulation Destroyed Walter Shaw
This is a clear-cut, individual case of how government regulation hurts people – in this case a poor person without credentials but possessing a great talent that, through the free enterprise system, could have helped many people and made him a wealthy man. But due to the corporatist, or fascist, policy of the US government to grant and defend Bell’s monopoly on the telephony industry, Walter Shaw was prevented from engaging in consensual and mutually beneficial trade. He couldn’t exploit his own talents. In fact, his wonderful talents made him an enemy of the Bell System and eventually led to personal disaster.
Progressives want to paint business regulation as a strategy for keeping corporations in check. But, in reality, the moral hazards of monopolistic governance (i.e., government as we know it) enable corporations to effectively purchase regulatory agencies. These agencies claim they are policing big business but the truth is that big business owns and controls them. Regulatory agencies are simply propaganda tools. Look, say the corporations, we complied with the duly enacted regulations that apply to our business. We’re legal and proper. What they don’t tell you is that they wrote those regulations for their own convenience. The government regulatory agencies are simply their cheap rubber stamps.
The documentary ends with an analysis that slides into mom-and-apple-pie generalities about democracy. With a democracy, the film argues, there should be continuous role by the people. But representative democracy or a representative republic are not actually continuous rule by the people. These two political systems constitute effective rule by an elite. Sure, the elite must be (re-)selected on a regular basis, but that only makes them more dependent on outside funding – the same outside funding that seeks to purchase improper business advantage through capture of the regulatory agencies that these elected officials nominally control.
Continuous rule by the people is market anarchism, where there is no monopoly government. People make rules for their lives and their property through voluntary contracts. When an individual or group of people want to change something, they can just do it directly, by modifying their contracts. There is no legislature of dozen layers of bureaucracy to first traverse. Market anarchism is direct rule by the people, for the people and of the people.
Capitalism is not Corporatism
The filmmakers clearly state that the Bell System monopoly is an example of corporatism – the societal system in which corporations and governments cooperate for mutual benefit. This is better known as fascism. They even trace its origin as far back as Mussolini. Capitalism is not corporatism or fascism but the filmmakers then run several clips critical of capitalism. This confuses the viewer.
Capitalism is the private ownership and control of industry. Capitalism excludes government control. Capitalism is the separation of government and economy. This documentary is a case study in how the failure to separate government and economy makes the rich richer and ruins the lives of those with less. But the documentary missed its chance to make this point. This is a tragedy given how prevalent fascist elements continue to be in the US economy.
In any case, “Genius on Hold” is a moving story of personal tragedy that came about due to corporatist public policy. And, in case you weren’t already aware, libertarians are against corporatism.
Watch it on Netflix
The documentary is currently available for streaming on Netflix Instant. It’s a riveting watch that traverses a nice chunk of modern American history as well as countless libertarian talking points. Here is the trailer.