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post-autistic
economics review In this issue: Forum on Economic Reform (Part III) - The Reform of Intellectual Property
Two Movements - The Rand
Portcullis and PAE
Forum on Economic
Reform In recent decades the alliance of neoclassical economics and neoliberalism has hijacked the term “economic
reform”. By presenting political
choices as market necessities, they have subverted public debate about what
economic policy changes are possible and are or are not desirable. This venue promotes discussion of economic
reform that is not limited to the one ideological point of view. The Reform of Intellectual Property Dean Baker (Center for Economic and Policy Research, USA)
It is remarkable that economists, who
usually view themselves as advocates of free market transactions,
unquestioningly embrace various forms of intellectual property rights,
especially copyrights and patents. Copyrights and patents are government
granted monopolies. They have their origins in the feudal guild system, not
the free market economics of Smith and Ricardo. In fact, at the end of the 19th
century, Switzerland and the Netherlands actually eliminated patent and
copyright protection, with the intent of promoting free market competition.
In spite of their feudal legacy, and their obvious status as forms of
protectionism, few economists ever question the merits of the patent and
copyright systems. This paper details the ways in which
patents in prescription drugs and medical equipment and copyrights lead to
economic inefficiencies.1 It points out that the efficiency losses
from these forms of protectionism are likely several orders of magnitude
larger than the barriers to international trade that receive so much
attention from economists. The paper also outlines alternative
systems for providing incentives for innovation and creative artistic work.
In the absence of deliberate government policy, there probably would be
under-investment in innovation and creative work, but that is not the
relevant question. The relevant question is whether the existing patent and
copyright systems are the most efficient mechanisms for supporting innovation
and creative work. That would be the question that any honest economist would
pose. The
Inefficiency of Drug Patents and Copyrights The basic argument for patents and
copyrights is straightforward. In a free market, without protections for
intellectual property, there will be under-investment in research and
creative activity like writing or recorded music or movies. As soon as an
innovation is made public, others could duplicate the process and sell a
comparable product, without having to bear the costs of the research that
allowed for the innovation. In the case of recorded music or movies, copies
can be made at minimal cost (zero cost in the Internet Age), which means that
in a free market, the original producers could not sell the products at a
high enough price to allow the creative workers to be compensated for their
work. However, the fact that a free market will under-invest in research and
creative work hardly establishes that the feudal institutions of patents and
copyrights are the most efficient way to support such work in the 21st
century. The economics profession has devoted vast
amount of research and textbook space to proving the inefficiency of various
forms of protectionism. The basic story in this work is that protectionism
causes the price to exceed the marginal cost of production. All of this work
is entirely applicable to patents and copyrights, except the impact is at
least an order of magnitude larger than with most instances of protectionism
in international trade. While tariffs and quotas rarely raise the price of
goods by more than 30 or 40 percent, patents on prescription drugs typically
raise the price of protected products by 300 to 400 percent, or more, above
the marginal cost. In some cases, patent protected drugs sell for hundreds or
thousands of times as much as the competitive market price. In the case of
copyrighted material, recorded music and video material that could be
transferred at zero cost over the Internet, instead command a substantial
price when sold as CDs, DVDs, or licensed downloads. Copyrighted software
commands even higher prices. The distortions resulting from these huge
gaps between price and marginal cost should cause an honest neo-classical
economist great pain. At the onset, the lost consumer surplus from patent and
copyright protected pricing is enormous. The basic rule on this issue is that
the size of the deadweight loss is proportional to the square of the gap
between price and marginal cost. The United States alone is projected to
spend $210 billion this year on prescription drugs. In the absence of patent
protection, the same drugs would probably cost no more than $50 billion. (The
savings would be equal to $500 per person for everyone in the country.) The
United States will spend more than $30 billion on recorded music and videos
this year, material that could be available at zero cost on the Internet. By
comparison, many economists felt the need to comment on the NAFTA agreement
in 1993 that reduced tariff barriers on imports from Mexico. At the time,
U.S. imports from Mexico were less than $40 billion a year, and the average
tariff was already less than 5 percent. Of course the deadweight losses are just
the beginning of the story. As the textbooks tell us, monopoly profits
encourage all sorts of anti-social rent-seeking behavior,
activities that we see in abundance in the case of both patent and copyright
protection. Starting with drug patents, the newspapers
are filled with stories about concealed or distorted research findings by
pharmaceutical companies who are trying to exaggerate the benefits, or
minimize the risks, associated with their drugs. The corruption from companies
pursuing monopoly rents permeates the research process. Medical journals
routinely receive and publish ghost written articles, where prominent
researchers have been paid by the industry to lend their names to company
authored papers. In the same vein, the medical experts who provide guidance
to the Food and Drug Administration (FDA) on drug
safety are often receiving payments from the manufacturers of the drugs they
are evaluating. The sales effort to doctors is similarly
corrupted by the pursuit of monopoly profits. According to the industry own
data, more people are employed in sales than in research, as the industry
relies on an army of salespeople to push its latest blockbuster drugs to
doctors. Often this sales effort involves dinners, trips to resorts, and
sometimes even outright kickbacks – all ways in which drug companies share a
portion of the monopoly profit that they earn by selling drugs at patent
protected prices. Monopoly profits also distort the
direction of research. According to the FDA's
classification system, roughly 70 percent of new drug approvals are for drugs
that do not represent qualitative improvements over existing drugs. While
there is little social purpose served by developing these duplicative drugs
in most instances, patent monopolies can make the development of copycat
drugs very profitable. A copycat drug can allow a firm to cash in on a
portion of the profits earned by a competitor on a blockbuster drug. In a
world with patents, the introduction of a second drug in the market will have
the beneficial effect of lowering prices to some extent (there is more
competition with two drugs than one drug), however if drugs were sold in a
competitive market, there would be little reason to pursue the development of
most copycat drugs. The fact that most new drugs fall in this copycat
category suggests that a very large share, possible a majority, of patent
supported research is wasted.2 Drug patents also distort the direction of
research by pushing it in the direction of patentable results. Research
directed at finding cures or treatments based on diet, exercise, or
environmental factors will not be pursued in a health care system that relies
exclusively on patent monopolies to finance research. This neglect can be
offset by government funding targeted specifically towards these areas, but
the patent system will direct resources elsewhere. Finally, the granting of patent monopolies
will lead to the development of a gray market, in
which unauthorized versions of patented drugs are sold. The large gap between
the patent protected price and the marginal cost of production creates
opportunities for profit in the same way that the high price of illegal drugs
like cocaine and heroin create opportunities for profit. Since these unauthorized
drugs will be sold outside of regulatory oversight (except when they are
imported from countries with well-developed regulatory systems, like Canada),
there will be limited quality control. Unauthorized drugs are likely to be
less effective than the patented drug, and possibly even harmful. In either
case, the health outcome is far from optimal. To sum up, there are a long set of
complaints against the inefficiencies associated with drug patents, all of
which should jump out of any introductory textbook treatment of protectionism
in international trade. Yet, the economic profession has been virtually
silent on the inefficiencies associated with drug patents.
This silence would be justified if there
were no alternative mechanisms available to support the bio-medical research
that leads to the development of new drugs. However, there are alternatives
and they already exist. The most obvious alternative is direct government
funding of drug research.3 This already occurs on a massive scale.
In fact, the $30 billion that the United States federal government pays each
year to support bio-medical research at its National Institutes of Health (NIH) is approximately 20 percent larger than the $25
billion that its pharmaceutical industry claims to spend on research. While
this research is primarily directed towards more basic science (in order not
to interfere with the efforts of the drug industry), there are many instances
of new drugs being developed almost entirely through NIH
support. It also requires some extraordinary claims about epistemology to
argue that public funding of NIH is an efficient
mechanism for supporting basic research (a contention strongly supported by
the pharmaceutical industry), but somehow would prove to be a boondoggle if
the agency took on the responsibility of developing new drugs and bringing
them through the FDA approval process. The basic numbers are very striking. If
drug prices in the United States were to fall by 70 percent in the absence of
patent protection, it would amount to savings of more than $140 billion a
year, given 2005 spending levels. This is almost six times as much as the
industry claims it is currently spending on research. Since half of this
money may go to research copycat drugs of little social value, the savings
from eliminating drug patents in the United States may be more than 10 times
as large as the spending necessary to replace the useful research performed
by the pharmaceutical industry.4 There are clearly better and worse ways to
structure a system of government financed research. For example, the Free
Market Drug Act, a bill recently introduced in the U.S. Congress, called for
establishing a set of competing government corporations that would be
evaluated at periodic intervals (e.g. 10 years) for the quality of their
work.5 The worst performers would be put out of business with new
ones created to take their place. There are other mechanisms that could be
created to ensure that the funding is spent efficiently, but given the
incredible waste associated with the existing system of patent financed drug
research, it seems that there will be huge payoffs for both the economy and
for public health by investigating alternatives. It is also important to note that this
issue has taken on enormous importance in an international context. One of
the major areas of dispute in recent trade pacts has been the ability of less
developed countries to purchase drugs without paying patent protected prices.
If new drugs were placed in the public domain so that they could be produced
as generics everywhere in the world, then this whole issue would quickly
disappear.6 This would facilitate access to essential medicines
for hundreds of millions of people in the developing world. Copyrights While copyright enforcement may not raise
the sort of life and death issues as do drug patents, it also leads to
enormous economic inefficiency. Furthermore, the extent of this inefficiency
will grow through time, as technology makes it ever easier to transfer
recorded audio and visual material, as well as software. The standard economic texts tell us that
there are large losses of consumer surplus associated with the government
monopolies created by copyright protection. In the case of items like recorded
music, movies, and software, material that could generally be transferred at
zero cost, instead carries a high marginal cost. In addition, the
difficulties of protecting copyrights in an era of digital technology have
led to enormous enforcement costs. These enforcement costs include not only
the costs directly associated with policing against unauthorized uses of
copyrighted material, but also efforts to restrict the development of
hardware and software in ways that could facilitate unauthorized reproductions
of copyrighted material. There is an additional, less widely noted,
cost of copyright -- it impinges on artistic freedom. In the absence of
government intervention, any writer, musician, movie producer or other
creative worker could take any existing artistic work and modify it in any
way that they chose. This could be done for parody or as a creative extension
of an existing work. (Imagine, for example, writers choosing to write dozens
of different endings for a popular novel or to develop new works building off
its fictional characters.) Copyright largely prohibits this practice, unless
the creative worker has the copyright holders’ approval. It is possible to design a system that
compensates creative workers, while still leaving the choice of material to
individuals (rather than some government commission), and eliminates the
economic distortions associated with copyright. The basic point of such a
system would be to compensate the creative worker at the point where they do
their work, rather than compensating them after then fact for the work. If
the creative worker is compensated at the point where he or she produces the
material, then there is no need for copyright, the work can be transferred as
quickly and freely as technology will allow. One mechanism for this sort of
compensation is a system of individual vouchers, where each adult can be
given a fixed sum (e.g. 50 to 100 dollars a year), which can only be used to
support creative or artistic work. These “artistic freedom vouchers” (AFV) could be paid out through the tax filing system, so
that individuals could make their payments each year directly through their
tax return.7 The system of charitable contributions in
the United States provides an excellent model for such a system. Under the
United States tax code, a wide variety of organizations engaged in charitable
work (this includes religious activity, aid to the poor, and even publicly
oriented think tanks) can register for tax exempt status. This registration
allows individuals to make contributions to these organizations and to deduct
the contribution from their taxable income. The role of the government in this process
is to simply record that an organization engages in some specific activity
that qualifies for tax exempt status. The government makes no attempt to
evaluate the quality or appropriateness of this activity. The only monitoring
involved (in principle) is to ensure that no fraud is being committed,
specifically that financial records by the tax exempt organizations are being
properly kept, and that it is fact engaging in the activities in which it
claims to be engaged. The role of the government in the AFV system would be very similar to its role in
monitoring the system of tax exempt organization. Under the AFV system, anyone wishing to receive money through the
system would be required to register as a creative worker, indicating what
sort of creative work they do. Intermediaries could similarly register to
receive funds by indicating that they support specific types of creative work
(e.g. producing jazz music, writing mystery novels, etc.). This registration
entitles the individual or intermediary to receive money through the system.
(An individual would have to be registered with the system to receive money
through an intermediary.) The one other requirement for any
individual or intermediary registered with the AFV
system is that they would not be eligible for copyright protection. The logic
here is simple, the creative worker is entitled to be compensated once for their
work, not twice. If the worker has received money through the AFV system, then he or she has been compensated in
advance for the work they produce. There is no reason that the government
should then also act to provide this worker or their agent with a monopoly
over the distribution of their product.8 Even a very modest sized AFV could support a vast amount of creative work. For
example, a $50 voucher would make approximately $10 billion a year available
in the United States to support creative workers. If these workers received
average compensation of $40,000 a year through the AFV
system, this money would be sufficient to support 250,000 workers. While there is no apriori
way to know for certain whether the money distributed to creative workers through
the AFV system would be more or less concentrated
than the distribution of earnings under copyrights, there is good reason to
believe that it would be less concentrated. The copyright system encourages
entertainment companies to select a relatively small group of creative
workers and to promote them as stars. The rationale is that it is costly to
promote a singer, musician, or writer to the point where they have a mass
following. Therefore, once they have succeeded in developing a star to this
point, it is far less risky to continue to promote the star than to take a
chance with a new prospect. As a result, the vast majority of promotional
money gets spent promoting a very small group of creative workers. Under the AFV
system, there is likely to be less profit in promoting specific creative
workers. Presumably intermediaries will attract support by demonstrating
their efficiency, which is likely to mean minimizing the money spent on
promotions rather than actually supporting creative workers. However, the most important distinction
between the AFV system and the copyright system is
that all the creative material produced through the AFV
system can be transferred at zero cost. Creative workers would promote the
development of technologies that would allow their work to be spread as
easily as possible, instead of insisting that hardware and software
manufacturers find mechanisms to lock it up, so that those who do not pay
cannot get it. There is also no reason that copyrights
could not co-exist with the AFV system. Creative
workers who remain outside of the AFV system would
have the option of getting copyright protection, just as is the case at
present. The only difference is that the copyrighted material would be forced
to compete against a large amount of creative work that is available at no
cost. But copyright only provides a monopoly on the copyright holder’s work,
it doesn’t protect the copyright holder from competition from free work. Another desirable feature about the AFV system is that it requires minimal enforcement by the
government. If a creative worker takes AFV funds,
and then obtains a copyright for his or her work, in violation of the rules
of the system, the copyright simply becomes unenforceable. Any person can
freely distribute this person’s work as though the copyright did not exist,
since it would not in fact be a valid copyright. In this case, enforcement of
the rules simply requires inaction on the part of the government. This is an
enormous contrast with the current efforts to enforce copyright protection,
which have included F.B.I. raids on college dorm
rooms, prohibitions on the development of technology, and government
propaganda efforts on the evils of copyright infringement. Reforming
Intellectual Property: Getting Away from the Middle Ages The alternatives to patent and copyrights
described above may not be the best ways to promote innovation in biomedical
research or creative and artistic work.9 However, it is probably
even more certain that the current patent and copyright systems fail this
test. Given the large and growing costs associated with patent and copyright
enforcement it is imperative that alternative incentive mechanisms be
explored. Clearly there are very powerful interests
that stand to lose from reform of intellectual property rules, specifically
the pharmaceutical industry, the medical equipment industry, the software
industry, and the media and entertainment industries. These sectors include
many of the biggest and most powerful corporations in the world. But the
strength of the resistance to reform does not affect the intellectual
argument for reform. It would be difficult to identify more harmful economic
policies than the current system of patent and copyright rules. They are few
cases where the application of standard neo-classical economics could have
such beneficial effects. Endnotes 1. There
is a distinct set of issues that arises in a case where a patent is issued
for a product sold directly to consumers and accounts for the bulk of the
product’s price (as is the case with prescription drugs and medical
equipment), compared with a patent on an industrial process. In the case of
patents on industrial processes, the expected outcome is that patent holder
will sell the patent to the user, who will then be able to use it at zero
marginal cost, thereby eliminating the distortions associated with patent
protection. 2. A
study commissioned by the PhRMA, the industry's
lobbying group, found that on average, copycat drugs cost almost as much to
develop as breakthrough drugs (see Ernst & Young LLP.
2001. Pharmaceutical Industry R&D Costs: Key Findings about the Public
Citizen Report. Pharmaceutical Research and Manufacturers of America.
[http://www.phrma.org/press/newsreleases/2001-08-11.277.pdf]). 3. A
fuller account of the economics of this sort of alternative to patent
supported drug research can be found in Baker and Chatani
(2002), (see “Promoting Good Ideas on Drugs: Are Patents the Best Way? [http://www.cepr.net/promoting_good_ideas_on_drugs.htm]). 4. The
industry estimates that approximately 8 percent of its research goes to
studying production and safety issues. This research would be carried through
even if all drugs were sold as generics, and therefore would not have to be
replaced by the government. 5. A full
description of this bill is available on the website of its lead sponsor,
Representative Dennis Kucinich [http://www.house.gov/kucinich/issues/freemarketdrugact.htm]. 6. It
would be desirable to have some sort of international system that ensured
that countries paid their fair share toward supporting biomedical research.
Hubbard and Love (2004) provides an example of such an agreement (see "A
New Trade Framework for Global Healthcare R&D." Plos
Biology, V2, #2. [http://www.plosbiology.org/plosonline/?request=get- document&doi=10.1371%2Fjournal.pbio.0020052]). 7. The AFV system is described in more detail in Baker 2003 (see
“The Artistic Freedom Voucher: An Internet Age Alternative to Copyright”
[http://www.cepr.net/publications/AFV.htm]). 8. It
would be important that this ban on access to copyright protection extend for
a substantial period (e.g. five years) after receiving AFV
funds. The point of the AFV system is to establish
a competitor to the copyright system, not a farm system for the entertainment
industry. If the most successful people in the AFV
system could simply leave and immediately become eligible for copyright
protection, then the system would end up just providing a subsidy to the
copyright protected entertainment sector, since it would screen out less
popular artists for it. 9. It is
likely that some sort of direct funding mechanism would be the most efficient
way to support software development, another area in which patents have led
to massive waste, although a decentralized AFV
mechanism may be appropriate for some types of software, such as video games.
___________________________ ___________________________________________________ Greed (Part II) Julian Edney (1) © Copyright:
Julian Edney 2002-2005 An essay concerning the origins, nature,
extent and morality of this destructive force in free market economies.
Definitions. Paradoxes and omissions in Adam Smith's original theory permit -
encourage - greed without restraint so that in a very large society [USA] over
two centuries it has become an undemocratic force creating precipitous
inequalities; divisions in this society now approach a kind of wealth
apartheid, and our values are quite unlike Smith's: this is an immensely
wealthy society but it is not a humane society. Wealth and poverty are connected, in fact
recent sociological theory shows our institutions routinely design inequality
in, but this connection is largely avoided in texts and in the media, as is the notion that
greed is a moral wrong. Problems created by greed cannot be solved by
technology. We are also distracted by
already-outdated environmental rhetoric, arguments that scarcities and human
suffering follow from abuse of our ecology. Rather, these scarcities are the
result of what people do to people. This focus opens practical solutions. Part I of
Greed appeared in the last issue of this journal and is available at www.paecon.net/PAEReview/issue
31/Edney31.htm The Pivot What drives this society? We proudly answer that
what fuels people in this nation [USA] is a competitive drive to be better.
The obvious result is inequality, because the intention is inequality.
Competition deserves a closer look. Anthropologist Ruth Benedict summarized her
overseas work saying the most obvious difference among societies was whether
the living was cooperative or competitive. This was the 1930s. She used the
term synergy. A high synergy society is socially cohesive, cooperative and unaggressive - one person’s acts at the same time serve
his own advantage and that of the group, his gain results in a gain for all.
But cultures with low synergy are highly competitive and the individual gains
advantage only at the expense of another, aggression is prized, indeed humor originates from one person’s victory and another’s
demolition. Low synergy eventually threatens the social fabric. Her example
was the Dobu of New Guinea, whose daily atmosphere
of ill will and treachery among all made it a showcase of Hobbesean
nastiness, and feared among its neighboring tribes.
The Dobu have no chiefs, no government, no
legalities and live very close to the "state of nature"
philosophers propose. Danger is at its height within the tribe, not from
without, and the attitude lives that it is prudent and right to inflict pain
on losers to protect your win. Hierarchy is based on ruthlessness which is
admired, and inequality and injustice are believed to be in the nature of
things 43. Benedict pointed out the world’s societies can be
arranged on a continuum from those with the highest synergy to those with the
lowest. In our own society, we love competition and we
promote inequality. A team of sociologists headed by C.S.
Fisher 44 has recently tightened this argument with a treatise
that first attacks the Bell Curve explanation that inherited differences in
IQ and natural talent can be used to explain our unequal fortunes. They
summarily deny the economist's claim that inequality fosters economic growth.
Third, they state, our inequalities are by design, and they are growing. The
result is that in the last twenty years we have become a steeply hierarchical
society, and this is with popular support. We are choosing inequality through
government economic policies that chronically distributed wealth unfairly. Clearly our own society has lower synergy than we
boast - and it’s falling. Simply, any free market culture that would rather
create a market in a resource than have abundance for all is creating
inequality as it goes. But so long as we can attribute unhappiness to global
limits, or to inherited individual differences, then nature is to blame. We
can hoist a paradox. We can both have our levels of misery and congratulate
ourselves on our modern attitudes and on a humane society. Manipulation
of Hope That last hypocrisy is researched by two Yale
scholars, Guido Calabresi and Philip Bobbitt 45
who argue we practice inequality everywhere while pretending to equality (it
is so close to our notion of justice). This subversion requires a nest of
contradictory customs, a shell game designed to help us avoid and deny the
moral consequences. And a retreat to other standards: sometimes, conceding
inequalities, we will go through contortions to show that at least we are
humane. The cost of all this, of course, is honesty. Calabresi and Bobbitt argue that instead of universal
abundance, there is perpetual scarcity. We calibrate it so. Society
oscillates between two kinds of decisions. A first order decision is how much
to produce or allow of a desirable good, and a second order decision is who
shall get it. If this process were obvious, we would be outraged at the
insight that there is needless suffering, because the scarcity is man made.
Whether the desirable good is shelter, life-saving medical treatment, an
education, or decent treatment by the police, we simultaneously manage the
perception that all is well when in fact it is well with only a fraction of
the population. Seeing certain medications or (in war) draft-deferments only
go to the rich, or seeing that with our aggregate wealth, poverty need not
exist, we search for reasons that suffering comes to some people but not
others. The focus becomes methods of allocation. The central insight is to
see that allocation by itself is an act signifying inequality. We realize
certain methods of allocation are "acceptable," meaning they do not
morally offend, for instance, the free market method acceptably allocates
hunger because it decentralizes choice into individual decisions, and we can
blame the hungry person. So this distracts from the scarcity itself. And hope
is preserved. But each allocation method is rather arbitrary. We wonder if,
keeping the same overall percentages, poverty could just as well be allocated
by lottery. The market does not acceptably allocate the draft, so we have to
shift to another method of allocating that inequality. Mistakes in choosing
allocation method pull back the curtain on the fact of the original
scarcities, creating fear and outrage. But the reality is, the scarcity of
doctors, on whom lives depend, is a result of a human decision how many to
train - and not a limitation of Earth's carrying capacity. Sensation-hungry
Press While we are uncomfortable with the fact that the
market runs an "acceptable" number of auto deaths, cancer
fatalities, or hungry four-year-olds, it allows us to explain each case as
personal misfortune. It will appear there is no other choice, and our
morality is preserved. So while we believe in a strong, happy society,
brimming with progress and good for all its people, we get daily news hinting
at our less-civilized status. The facts are, shelters for battered women are
always crowded, fear permeates some schools, barbarism spreads in our
prisons, and in some precincts it is becoming harder to distinguish police behavior from that of criminals. Calabresi
and Bobbit continue this argument describing a
societal device we use in huge efforts to preserve this contradiction. The perception of humaneness is crucial. It tells
us our system is both strong and good; otherwise glimpses of inhumanity are a
dangerous hint that things are not working. Two examples: some years ago, a
million dollars was spent on the rescue of a single downed balloonist in a
dramatic, highly publicized race of helicopters and boats. The drama proved
our humanity. We make massive efforts for someone in distress. What was never
publicized was the chronic underbudgeting of the
Coast Guard which otherwise would make such rescues routine. In a second
example, heroic amounts were spent to rescue prisoners from a fire in a
penitentiary. But what was never revealed is that the prison's scarce medical
resources meant hundreds of others routinely went without treatment or died
at other times. This type of rare and heavily publicized humane event, fed to
a sensation-hungry press, creates a "sufficiency paradox", an
"illusion of sufficiency" 46 that the goodness is there
for us all. Generalized, this creates the illusion of abundance. The media
deal in demonstrations of sudden and spectacular humanity. But for every
person who gets the rare benefit, many others do not. A life-saving kidney
goes to one of several people in need, and the life-taking decision about the
others is not publicized. The "illusion of sufficiency" device
massively confuses possibility with probability but on a societal level, it
is a media-promoted and effective manipulation of hope. We too use Potemkin
villages. Kafkaesque What about all the people who lose to scarcity? People
hate themselves for failing, but unless society is honest, they must absorb
the original scarcity plus the anguish of not knowing how they failed and not
knowing what to do. To the loser the frustration and humiliation of not
knowing why, creates "the Kafkaesque cost of being in a process without
knowing how to help oneself" 47. If people compared our
national inequities in wealth with the insight that, through decided levels
of scarcity, the aggregate amount of suffering is controlled, public emotion
could erupt. Calabresi and Bobbitt's point is that we must keep examining
our values. Equality and honesty are prime values. But in these machinations,
they are chronically opposed. We must chose honesty, then we can begin the
struggle to reclaim our real humanity. Corporations Next we bring into this mix the vastly wealthy
American transnational corporation. Businesses exist to make profit. Corporations are a
type of business association, ones with special legal powers and durability.
They have been a usual part of the business environment since the fifteenth
century. International corporations were the muscle behind European
colonization in the second half of the last millennium, but in that era of
horse and sail, their power was a fraction of what it is today. Some
corporations have now grown gigantic, actually becoming global forces with
more power and resources than some countries. Actually the largest corporations derive power not
only from wealth but because they can fluidly migrate to whichever nation
offers the least legal restraints, the cheapest labor,
the most amenable economies and the friendliest politics. In this sense they
float above the world's constraints. But as a rule American corporations differ sharply
from the nation which hosts them. They are alien to the notion of democratic
responsiveness, internal or external. In the universe of corporations
everything focuses on the acquisition of resources, labor,
and markets. These are the sources of power. Inside corporations Equality hides
her face. Corporations are not elected, so they are concerned
with nobody's approval. Aside from occasional shareholder meetings, they
never ask the public for ideas or permission. Nor do the workers elect their
leaders. Inside, most business corporations are steeply hierarchical
structures, in which employees' freedom to do what they want is openly bought
for the wage. They are not responsive to the will of those they employ; some
have inner dynamics that are feudal; some of their hierarchies are also
jungles of dysfunction. In democratic Nevertheless, the overwhelming portion of our
population denies any problem. Charles Derber,
among several writing on this topic, believes there are specific reasons we
don't even think about corporations. First, we are all educated to look
elsewhere, for instance to unchecked government, as the primary threat to
freedom. Second corporations make and sell our creature comforts, so we can't
tamper with them without threatening our prosperity. Third, we feel
powerless. The concentration of corporate power is inverse to people's
feelings of personal power. Fourth, we see no alternative 48. Powers
without Obligation If wealth is the only standard we use to judge,
then we have to admit corporations are staggering successes and everything to
venerate. They absorb people's lives. We consume their products daily, use
their services hourly, rely on them for information. We are dependent. We
compete to work in them. What protects them is that we are taught the system
is rational. We are also taught that the goodness of a society depends on how
well its topmost members are doing, so the higher our topmost members, the
more they are discussed with awe. The natural foe of corporations is government. But
international corporations are so wealthy they slide over governments. They
have become like tourists in their own country. As they lose national
loyalties, they come close to becoming powers without obligation. As the
largest transnational corporations grow, they
become sovereign and untouchable 49. The
Corporate Personality Roughly there are, I suppose, two kinds of people.
The first divides the world into Good versus Bad. The second divides the
world into the Strong versus Weak. These two types never can communicate.
Among the latter, the concern is never to be caught weak because hell takes
the hindmost, and among them all talk about goodness and ethics is
irrelevant, and every effort is given to staying strong. This second type
infests corporations. They are refractory to talk of humanity and you can
shout all you want and they will not listen; every ounce of their attention is
given to their competition. Their rules of engagement are Darwinian. Large scale competition among these massive
corporations is what upgrades greed from whimsical excess to lethal force. Two Areas
of Corporate Control First, Christopher Lasch
points out that private universities depend on corporations, through
investments, grants, or otherwise; and wherever their money is used,
corporations influence state universities too. Consequently you will find
free discussion on university campuses on almost any topic but one. Academic
debate is not used to deconstruct the corporations that feed them. The News The second important area of control is corporation
ownership of the media. Through corporate competition, we now live in a
system in which a few colossal media conglomerates dominate the news outlets.
A typical conglomerate owns film studios, television studios, publishing
houses, retail outlets, theaters, newspapers, music
studios, cable channels, and in some cases, amusement parks. This oligopoly of
conglomerates is small. It has overwhelming financial power, and it is not
responsive to the will of the public. Corporations exist for profit, so the news has
become a commercial product. Largely, the same mentality making decisions
about entertainment is now making news decisions (and the two, according to
Neal Gabler, are increasingly difficult to tell
apart 50). Analyst Robert McChesney 51
says commercialization of the news has been a slowly growing process,
starting in the 1840s when it was realized that selling news could actually
make an entrepreneur money. Greed rather than journalistic standards took
journalism astray in the era of the Yellow Press when stories were written
for what sold and all the money came in from readers. Later on, newspaper
owners started getting bigger money from advertisers. Nobody objected,
because then as now, the myth is that the prime enemy of a free press was the
government, that competitive free market capitalism would always keep the
media unbiased and democratic. Missing
Topics We do have some control over which media programs
we watch. We still can choose among television channels, but the overwhelming
majority of channels are commercial, and corporations exert fine-grained
control over the consumer's viewing diet. And unlike The result? Television news viewers are
carpet-bombed with advertising. Advertisers actually survey for the kind of
news that is interesting to the viewers who have money to buy products.
Advertising firms are so influential that current journalism avoids antagonizing
them and politicians avoid antagonizing them. McChesney
says their control extends to blacking out certain topics. So while
education, drug testing, gay rights, religion are mentioned on commercial
television, other topics such as the representativeness
of the media system is a topic that is never aired. Social class issues are
avoided. If we live in a society of inequality, then we can wonder, every
time the television shows us the upper reaches of abundant success, which
scenes of poverty have been excised. Programs about the poor are rare. In effect, says McChesney,"media
firms effectively write off the bottom 15-50 percent of society."52 All of which, he continues, is undermining
democracy. Among McChesney's
remedies: first, make how the media are used a political issue. Second, a
separate 1% tax on advertising would raise substantial revenues (he estimates
$1.5 billion annually) which could be used to subsidize the nonprofit media. Advertising
We absorb from the television, and that is what
advertisers want. We take advertising seriously. Over a hundred
billion dollars is spent annually on advertising. Its goal is to occupy the
drive and psyche of the nation with wants, so that the nation will spend. But the media are doing much more. It is decided not to show on television the
varieties of fear in our rooming houses and alleys where people live in the
lowest reaches of poverty. It is decided not to show our hungry people living
in tilting rural shacks. Nor the ranks of exhausted faces in city sweatshops.
Lost, abject, hostile, desperate, these people's glances are pulled aside by
complicit belief that failure is the lot of the damned. These people are
quite available for filming and quite imageable.
Instead, television is filled with cacophonous distraction. Contradictions are withheld in the news. For
instance, new technology is lionized in commercials. But technology itself is
amoral. For example, it is also making torture easier. No one would
mythologize the kind of free market where people made profits marketing whips
and thumbscrews, but a recent Amnesty International investigation reports
that currently more than fifty War on
Logic Somehow the painful gap that exists between poverty
and abundance must be anesthetized. Television is the means. We stuff
television reality in the gap. Twenty-four hours every day commercial
television is an ongoing polychromatic display of games, short dramas with
gunplay and florid sex, perpetually interrupted by iridescent advertisements.
Television both provokes fear and promises ecstasy in ultra short attention
spans. It feeds a national obsession with beauty, teasing with glossy bodies,
glossy cars, luscious scenery. What is shown in commercials is overflowing
abundance, specifically in terms of climactic moments. Now a race is run and
now a prize is taken; now a man works for all of a second and a half, then
it's time for beers; now all the cooking has been done, and a sumptuous meal
is ready 54. The troubling theme is that human effort is noisily
trivialized in commercials. This is the narcotic. Television lathers a
bright, noisy blur over anything like sustained effort, perseverance, focused
long term goals, and over a society with chronic stresses. The evening news systematically distorts normal
time. Downtown riots in These are moves in a war against logic. And if you
watch television, you are having your thinking disrupted. The busy-ness of
rapid shifts of focus, the effervescent color, the
edgy, dramatic music, all make it difficult for viewers to build independent
ideas. Neuroses But instead of asking what the frenetic distraction
is about, we follow suit, with impulse. It's not just that advertisers say,
you can solve your problems by drinking our wines or wearing this underwear.
It's not just that each product is introduced as if it was the future of
mankind. It's that the commercial saturation has been effective. No one
mentally argues with the advertising. The real loss is that advertising is
now accepted as if it was information. As with any other drug, we need increasing
strengths. The only way to find out what television is doing to you after
years of watching is to turn it off for a month. Turn it on again after
abstinence, and it seems like a television's bid for our attention is like
repeatedly shooting a pistol into a chandelier. Television also grows neuroses in the corners of
its watchers. It grows invidious comparisons in us. Comparison shopping,
comparison socializing - eventually we live life by the method of
comparisons. Television is carefully producing hordes of viewers who are good
at one judgment, namely, whether the neighbor or
the person sitting across the room is a little better or a little worse off.
This powerful judgment, 'I'm a notch better than he; I'm not quite as
attractive as she', is what Alfred Adler diagnosed as a neurotic style 55,
with powerful motives to compensate. Television grows envy in us, and the fix
is to acquire. The result is a powerful narcissism, and an increase in the
rates of depression 56 among watchers who cannot keep up, unable
to match their lives to television's perfection. Greed, like many addictions, is all about the
sudden and spectacular. Advertising is passionately decorative, if thin as a
billboard. It serves the sudden and spectacular. Against images of poverty, fear and hunger,
television also churns routine optimism into its daily programming. All is
delivered in a happy, chatty style. More, each day, television will be
noisily emptied out and reinstalled the same. Sum In a free society, some people's greed inevitably
means deprivation for others. This does not require environmental limits, it
only requires persistent and competitive self-promotion, and in a vast nation
whose economy is two hundred years devoted to these principles, we now inhabit
a society with a small fraction of astronomically wealthy individuals
towering over a growing mass in poverty. This is an amazingly complex economy but we still
raise our young on sleeveless country myths. They never explain a market's
preferences for ensured scarcities, designed inequalities, and increasingly
segregated economic classes. Our schoolbooks teach, after the demise of
communism, that there is no superior alternative to Smithian
economics. Adherents believe that free market capitalism is the end of
history. Remedies The reflexive defense, of
course, is that we already have remedies. That we protect our poor with aid
and support, that our government provides a safety net for the least
fortunate in the form of welfare and food stamp programs. These programs are a shambling failure. Reports
detail the thin efforts of our sprawling agencies to get food to Americans
who are now hungry. In We do not properly protect our poor. Decades-long
efforts in the Great Society program and the War on Poverty have failed to
improve opportunities for the poorest Americans. As an index of our current
concern, consider the national allocation for Food Stamps. It stands at
0.0017 of the Federal Budget 59. Already tiny, Federal food
assistance allocations actually declined from 1995 to 1999 60. I'll sketch other options that don't work. What about private charity? Since droves of
homeless people (one quarter of whom are children) still roam the big cities,
since we have unfed hungry, and since it has been that way for a long time
and is not getting better, private charity has obviously been ineffective. It
is too little, or sporadic and unreliable. What about the churches? Their purpose for
existence includes helping the weak and needy. Curious for numbers, I divided
the number of homeless (conservatively estimated at 700,000 on any given
night, 2 million sometime during the year) by the number of Christian
churches. This nation is filled with churches: the World Almanac lists over
330,000 Christian houses of worship 61. If each church took in 6
homeless, there would be no more homelessness. (We are taught that God and
money don't mix. But actually the struggle between church and capitalism has
always been subtle.) What about positive thinking? With enough love and
trust and hope and unity and sensitivity and inclusiveness, will antisocial
greed disappear? Well, we might hope that goliath profiteering corporations
will desist in their exploiting, voluntarily come to their knees and want to
be part of godly world harmony. But they will not. Universal tolerance will
not stop transnational corporations wringing their
profit from the sweat of laborers' faces. And these
bromides do not create change, just a lot of weary smiles from well wishers.
On the topic of attitude, we'll treat smiling rationalizations the same, such
as the rationalization that 'greed is the sin that's good for the economy'.
This sort of solution is just a delay which will float us over relatively
good times. At present we have relatively high employment, so the vast
majority of Americans are at least earning some amounts of money. But this is
like a tide risen high, which covers all manner of unsightly things on the
sea floor. They are not gone. Should the tide go out, they will reappear.
Opines business professor Jim Johnson, "If you ask where all this could
be heading, in the event of an economic downturn, we could see another 1992
civil unrest." 62. Stopping
the Gap from Becoming Wider Harvard's John Rawls 63 has a way to
repair a whole society skewed into these inequalities. Rawls asserts the
misery of some is simply not made acceptable by having a greater good, as
proposed by utilitarianism, because that violates the principle of justice.
First Rawls insists that in addition to freedom and equality, there must be a
prior value in democracy, justice. And that economic rationality and justice
should forever be opposed. Rawls insists on a shift in focus. We should not
judge a culture by how its topmost members are doing, but by how it treats
its lowest. His solutions follow. First, this society should decide how low
any member can go. That establishes minimum rights. It requires we identify
the least-advantaged person in society, and draw focus to him. Next, the very
op and the very bottom of society should be (and all intermediate levels
should be) connected, as if by a loose linked chain. Then if the top rises,
it pulls the bottom up with it. If the bottom moves up, that closes the gap
toward equality. This arrangement does not prevent any upward rise; but it
establishes consequences on movements at the top. Other
Remedies We must look down. Even Business Week pointed out
that if the current wave of prosperity recedes, The mystique of poverty has to be cracked. A television
series 'Lifestyles of the Broken and Hungry' would not top the popularity
charts, but my point is that if media paid attention to the bottom rungs with
one-tenth the insistence in our commercial advertising, remedial changes
would occur. Further, public service messages resurrecting the concept of the
common good, would be a beginning. Actually remedies for greed do not have to be
expensive, nor big, organized programs. Primary education depends on the
skills of individual teachers, and if talented educators can reinstall the
Golden Rule (Do as you would be done by) in their primary classrooms, some of
the damage could be reversed. We need preventatives. Greed has to be
reinstalled as a moral wrong, and in religious circles, as a sin. Up the educational ladder, remedies will be
resisted. Here lives the fashion for nonjudgmentalism.
An extension of moral relativism, this trend to universal acceptance is a
couple of decades old and "Who am I to judge?" is now the standard
of the gentle classes and educated elite, even spreading to exotic healing
practices and 12-Step programs where it is thought that to suspend judgment
of self and others is for the betterment of society. This is nonsense.
Comfort only brings inaction, nonjudgmentalism is
moral vacuum 65, and eventually we will have no conscience to stop
what is happening. High on the academic ladder, of course, is
economics but our best economic theory has delivered us contradictions and
reverses. Volumes produced by economists, all written with graphite
dispassion, seem to promote opposites, and you wonder if a coup was carried
out by those adept at complicated thought. Just drive through any big city,
you will see newsstands sporting magazines with glossy coverage of
billionaires, these newsstands adjacent to people living among girders and
sewage drains, alleys, scaffoldings and grates. Among the social sciences, psychology may provide a
specific remedy. The Diagnostic and Statistical Manual of Mental Disorders
(DSM IV) 66 is a standard used by all psychotherapists. It is a
compendium of all mental illnesses and it is used as a diagnostic tool in
training psychiatrists, clinical psychologists and social workers. This book
has been expanding through succeeding editions as more and more mental conditions
have been described (which has expanded the domain of clinicians so far it is
now said that about half Moral
Inertia So there is a moral cause here. But the average
person hangs back from active protest. The problem is, even if we are not personally
greedy, we have connections to corporations that are. We are happy consumers.
Challenging the company we work for - would that be hypocrisy? Second, activism, we think, is radical action, and
what about all that street rant "if you're not with us, you're against
us!" - but we cannot rebel because our corporation is also our rent, and
we enjoy the good living we make, and we're not giving that up. Perhaps that explains why our most articulate
writers are so quiet on this topic. They also look within. So, bluntly, we
need a whole new strategy for change, in which a person who feels he is part
of the problem may also be part of the solution. Enter some new thinking. Max Bruinsma
is a sharp critic of the damage wrought by contemporary advertising in the
service of relentless acquisition. But times have changed, he says, and he
argues the polarizing slogans of past social revolutions (you're either with
us or against us) don't apply. We're in a historical shift. The modern
activist is different. The rationale: culture today is driven by commercial
advertising. In it, a particularly worrisome new trend is for advertisers to
soften up our thinking with billboard-size paradoxes. Building-size ads fill
our view and state that buying a very mainstream computer (Mac) is 'thinking
different'. Across the street another billboard shouts that acquiring a
glossy SUV is a singular act of rebellion. Bruinsma
quotes more examples: "Sometimes you gotta break
the rules," (Burger King), "Innovate, don't imitate" (Hugo
Boss), "Be an original" ( Well, we can follow suit. We can generate our own
examples of contradictions. So, perhaps, commercial success and social
responsibility are not incompatible anymore. Everything is possible if you
use self-contradiction; you are able to both work for a company, and rebel
against it. Corporate rebellion = loyalty. This leads to a technique a 'Sixties activist, Rudy
Dutschke, once called "the long march through
the institutions." It is a long term and less bloody strategy. Go in,
behave - and take over. The new culture agent is stylishly dressed, well
paid, and works in an plush ad agency, designing resplendent ads which
promote the return to honesty and social justice, humaneness, equity and the common
good 68 . The next revolution will be inside corporations. Conclusions As the rich get richer and the poor get poorer we
drop our pretenses to humanitarian democracy,
instead salute material excess, accept Darwinian business ethics, and pin up
as our national polestar the most powerful corporations. |