Wednesday, November 30, 2022

Dean Baker: OMG, a Right-Wing Jerk Can Buy Twitter! Media Concentration Matters

 via Patreon

It’s more than a bit bizarre that until Elon Musk bought Twitter, most policy types apparently did not see a risk that huge platforms like Facebook and Twitter could be controlled by people with a clear political agenda. While just about everyone had some complaints about the moderation of these and other commonly used platforms, they clearly were not pushing Fox News style nonsense.

With Elon Musk in charge, that may no longer be true. Musk has indicated his fondness for racists and anti-Semites, and made it clear that they are welcome on his new toy. He also is apparently good with right-wing kooks making up stories about everything from Paul Pelosi to Covid vaccines. (Remember, with Section 230 protection, Musk cannot be sued for defaming individuals and companies by mass-marketing lies, only the originators face any legal liability.)

If the hate and lies aren’t enough to make Twitter unattractive to the reality-based community, the right-wing crazies are putting together their lists of people to be purged. We don’t know who they will come up with, and what qualifies in their mind for banishment. We also don’t know whether the self-proclaimed free speech absolutist Elon Musk will go along, but there certainly is a risk that Musk will want to keep his friends happy.

In that case, Twitter may go the way of Truth Social and Parlor, which would be unfortunate, but probably better than having a massive social media platform subject to Elon Musk’s whims. But we should still be asking how we can get in a situation where one right-wing jerk can have so much power?

The Problem of Media Concentration Is Not New

The Musk problem is hardly new. After all, Rupert Murdoch has been broadcasting his imaginary world to the country for decades, highlighting pressing national issues like the War on Christmas and President Obama’s tan suit.

But the problem goes well beyond Murdoch. Media outlets are owned and controlled by rich people and/or large corporations. They exist first and foremost to make money. While there are some cases where owners may genuinely have a commitment to using their news outlet to serve the public, for example the Sulzberger family, which has controlled the New York Times for more than a century, these are the exceptions.

And, even with the exceptions, their perception of the public good is an extremely wealthy person’s perception of the public good. That may not be the same as the perception of an average working person struggling to get by.

As far as the for-profit enterprises, news outlets have to be concerned about getting advertising. That may make them less likely to report news that will reflect poorly on major advertisers. That means things like both-siding the role of the fossil fuel industry in global warming, or downplaying the windfall that corporations got from Trump’s 2017 tax cut.

This ownership structure could reasonably cause us to question the neutrality of news from outlets like CNN (owned by AT&T), ABC (owned by Disney), or NBC (owned by GE). But Musk’s takeover of Twitter takes the problem a step further. The viewership of each of the networks’ news shows numbers in the single digit millions. Twitter has almost 80 million active users in the United States. This means it matters much more if Twitter is taken over by a right-wing jerk than your average television network.

Alternatives to Corporate Control

Even though the media are incredibly important in shaping people’s view of the world, there has been remarkably little attention to the issue from most liberals or progressives. There are some small, and poorly funded, organizations, like Fairness and Accuracy in Reporting and Media Matters, which do focus on the issue. And there are a few prominent intellectuals who have written on the topic, like Rick McChesneyDan Froomkin, and Jay Rosen, but for the most part the issue of media control gets little attention from the left of center.

Ironically, campaign finance reform, which is almost certainly an exercise in futility given recent Supreme Court rulings, gets far more attention. The absurdity of the focus on campaign finance reform should be apparent to anyone who gives the issue a moment’s thought.

Suppose through some miracle Congress passed, and the Supreme Court upheld, a bill that limited billionaires’ abilities to buy political ads for their favorite candidate. Is anything going to stop these billionaires from buying up newspapers and television stations and running the ads supporting their favored candidates as news stories?

There is no remotely satisfying answer to that question, and it is ridiculous that campaign finance reformers haven’t recognized this fact. Limiting campaign spending by rich people will do nothing if we don’t do something to limit their ability to influence public opinion through the media.

Fortunately, there are some ideasfor challengingthe control the rich have on the media. The basic story is that we are not going to be able to prevent the rich from buying and owning media outlets. Instead, we will have to go the other way and allow the non-rich to have a voice.[1]

The idea is that we can give every person some amount of money (e.g. $100 to $200) to support the media outlet(s), or possibly a broader category of creative workers, of their choice. This system could be modelled along the lines of the charitable contribution tax deduction, where the government draws out general conditions for being eligible to receive the funds.

This means that the government specifies the types of organizations that can qualify to receive the funds. In the case of the charitable deduction, an organization has to indicate that it’s a church, or it provides food for the poor, or does something else that qualifies it to be a charitable organization.

The government doesn’t try to determine whether it’s a good church or whether the food it provides is high quality, the only question is whether the organization does what it claims. A similar policy could be applied to the recipients of funds allocated through this system. (In my view, I would make not getting copyright protection a condition of getting funding – the government gives you one subsidy, not two – but that is the sort of issue that could be resolved down the road.)

This sort of system could provide a large amount of money to sustain media organizations that are not owned by rich people. For example, if the credit were $200, and 10 million people chose to support a specific television network with their full credit, the organization would have $2 billion a year to cover its operating expenses. That is roughly equal to CNN’s annual operating revenue.

This credit could create enormous opportunities for the non-rich to finance newspapers/websites, television stations and other outlets that could compete with the current ones owned and controlled by billionaires. This path also has the great benefit that it could put adopted piecemeal, with states and even local governments, giving their residents the opportunity to support new types of news outlets.

If enough people could gain support for this type of program, they could get a more progressive state, like California or Massachusetts to pave the way, or a city like San Francisco or Seattle. Just as the movement for a higher minimum wage has spread from successes in these places, the same could happen with a tax credit system to support alternative media.

Fun with Elon Musk and Twitter

Even if it proves to be possible to advance a tax credit system to support alternatives to the billionaires’ media, we still have the problem of massive platforms like Facebook and Twitter being owned by rich people, who can essentially do what they want in accordance with their whims. The big problem here is the issue of network effects.

The idea of network effects is that people benefit from being part of a massive network, since they want to be able to see what a large number of other people are posting, and they may hope that a large number of people will see what they post. These effects can be exaggerated. For example, the overwhelming majority of users will never have their Facebook pages or Twitter posts viewed by more than a small number of people. Nonetheless, they are real. This makes it hard to dislodge a Facebook or Twitter, once it has become dominant.

One route to go is to make the playing field less hospitable to large platforms. This can be done by removing Section 230 protections for websites that either sell advertising or personal information. This means that the big platforms could be held liable for defamatory material that they circulated over their platform.

In this scenario, if election deniers wrote posts on Twitter saying that Dominion voting machines had switched votes from Trump to Biden, Elon Musk could be sued by Dominion for defamation, just as Fox News is now being sued. The same would apply to the vaccine deniers claiming that Pfizer and Moderna vaccines have killed huge numbers of people.

Taking away Section 230 protection from these platforms would not just help large actors. As it stands now, if some racist asshole started posting on their Facebook page that a restaurant owned by Blacks or Asians had poisoned their family and sent them to the hospital, the restaurant owner would have no legal recourse against Facebook. They could sue the racist, who may not have much money, but they could not even force Facebook to take down the post.

By contrast, if a television station or newspaper had allowed the person to speak or printed a letter to the editor along the same lines, they would face liability. They could be forced to issue a correction to avoid being named in a defamation suit.

There are clearly complications with going this route. A platform with billions of posts daily could not be expected to monitor posts in advance for potentially defamatory material. This problem has been solved (imperfectly) with copyright, under the Digital Millennium Copyright Act (DMCA), by requiring platforms to remove violating material in a timely manner after being notified by the copyright holder.

There could be a similar requirement for Internet sites. The evidence from the DMCA is that websites are overly cautious and err on the side of removing material even when the claim of violation is extremely weak. That may also prove to be the case with Internet platforms like Facebook and Twitter when it comes to allegedly defamatory material, but that is in part the point.

Part of the point of removing Section 230 protection from sites that rely on advertising or selling personal information is to put them at a disadvantage relative to sites that rely on subscriptions or donations to stay in business. In that case, people could count on posting material on a smaller site that might be removed by Facebook or Twitter. This would give sites operating on an alternative model a large advantage relative to the current Internet giants.

In any case, taking away Section 230 protection would clearly raise costs for the major Internet platforms. Given that Twitter was already struggling even before Elon Musk took it over, this sort of increase in costs would clearly be a serious blow.

Undoubtedly, changing the law on Section 230 protection would hurt some other sites as well. While some could probably switch over to a subscription model relatively easily, others may find it difficult. Sites will of course develop new modes of operation. For example, a site like Airbnb could require users to sign away their right to sue for defamation as a condition of usage.

As a practical matter, it is impossible to guarantee that there will be no negative outcomes from this change, just as is true of every policy that actually does anything in the world. The question is whether some number of sites either being seriously downsized, or going out of business altogether, is a price worth paying to prevent rich jerks from being able to operate huge platforms according to their whims.

To my view, it would be worth the price, but your mileage may vary. In any case, it is distressing to see we are now in a situation where this is the reality, not just a hypothetical. It speaks volumes about the quality of intellectual debate in this country, that this possibility apparently caught so many of our leading policy types by surprise.

[1] I also discuss this in chapter 5 of Rigged (it’s free).

Friday, November 25, 2022

Dean Baker: The Pandemic Treaty, Crypto, and Inequality (via Patreon)


The Pandemic Treaty, Crypto, and Inequality

Dean Baker, via Patreon

The World Health Organization is in the early phases of putting together an international agreement for dealing with pandemics. The goal is to ensure both that the world is prepared to fend off future pandemics by developing effective vaccines, tests, and treatments; and that these products are widely accessible, including in low-income countries that don’t have large amounts of money available for public health expenditures.

While the drafting of the agreement is still in its early phases, the shape of the main conflicts is already clear. The public health advocates, who want to ensure widespread access to these products, are trying to limit the extent to which patent monopolies and other protections price them out of the reach of developing countries. On the other side, the pharmaceutical industry wants these protections to be as long and as strong as possible, in order to maximize their profits. As Pfizer and Moderna know well, pandemics can be great for business.

The shape of this battle is hardly new. We saw the same story not just in the Covid pandemic, but also in the AIDS pandemic in the 1990s, when millions of people needlessly died in Sub-Saharan Africa because the U.S. and European pharmaceutical industry tried to block widespread distribution of AIDS drugs.

Although the battle lines are familiar, one disturbing feature is the continuing failure of those concerned about inequality to take part in this debate. In the United States, we have plenty of groups and individuals who will spend endless hours fighting over clauses in the tax code that may give a few hundred million dollars to the rich. This is generally a good fight, but it is hard to understand the lack of interest in the structuring of a pandemic treaty that could mean hundreds of billions of dollars going to the rich.

This is not fanciful speculation. After the U.S. government paid Moderna $450 million to develop its Covid vaccine, and then another $450 million for the Phase 3 clinical trials, it then let the company have intellectual property rights in the vaccine. The stock price then increased more than ten-fold, creating at least five Moderna billionaires.

The extent of government support for the Moderna vaccine is extraordinary, but the basic story of drug companies getting huge profits, and select employees getting very rich, as a result of government research and government-granted patent monopolies, is very much the norm. The United States will pay close to $525 billion for prescription drugs in 2022.[1]It would likely be paying less than $100 billion in a free market, without patent monopolies and other forms of protection. The difference of $425 billion is more than half the size of the defense budget, it comes to more than $3,000 per family. And, it makes a relatively small number of people very rich.

The issue of intellectual property claims in the context of a pandemic preparedness agreement will not directly overturn the whole structure of the pharmaceutical industry, but it is likely to involve a substantial chunk of money, if a future pandemic is similar to the Covid pandemic. It also could establish an alternative path for financing drug development.

If there was an agreement that publicly funded research would be freely shared across countries, and that anyone with the manufacturing capabilities could produce the drugs, vaccines, and tests that were produced by the research, it could establish the feasibility of a clear alternative to patent monopoly financed research. This could become a model for drug development more generally, which would jeopardize the huge fortunes being generated in the pharmaceutical industry.

For this reason, there is potentially an enormous amount of money at stake, with large impacts on inequality, in how a pandemic preparedness agreement is structured. In short, there is plenty here that should warrant the interest of the individuals and organizations that focus on inequality; they should be paying attention.

Of course, this doesn’t take away from the fact that the main focus of a pandemic agreement should be on saving lives. But the delays in sharing technology in the Covid pandemic strongly suggest that the path of open source research and free market production will be best both from the standpoint of reducing inequality and saving lives.

The Crypto Meltdown: Just Tax Gambling

I’ve been following economic debates long enough to have seen lots of craziness. In the 1990s stock bubble, I heard PhD economists telling me that we could count on the stock market going up 10 percent a year, even when price-to-earnings ratios were already at record highs. In the 00s, we had financial experts saying that housing was a safe investment because, even if the price plummeted, you could always live in your home.

The crypto craze has both bubbles beat, as the price of absolutely nothing soared to incredible levels. Other than possibly facilitating illegal transactions (I’ve heard law enforcement experts claim that crypto can now be traced relatively easily), there is no remotely plausible use for crypto. In other words, its price is pure speculation. Bitcoin and other crypto currencies have no intrinsic value, therefore the price can very possibly fall to zero, once the promoters run out of suckers, or “the brave,” as Matt Damon calls them.

Anyhow, this one really should not be hard from a policy standpoint. Putting money in crypto is gambling, pure and simple. We don’t make it illegal for people to gamble. They can gamble in Las Vegas bet on sports events and elections, or play the lottery. We just tax gambling so the government can get a cut and we try to make sure that people understand what they are doing – that they are playing a game that is structured so that they will lose.

In this sense, taxing crypto trades seems like an ideal policy. It will be way to both get tax revenue and also to inform people that they are gambling, not investing. It looks like we presently have around $2 trillion a year in crypto trades. If we tax each trade at 1.0 percent rate (half paid by the buyer and half by the seller), that would raise $20 billion a year, or $200 billion over a ten-year budget window.

A tax of this size (still far lower than taxes on casino gambling or lotteries) would hugely reduce the volume of trading, so the government may end up collecting half this amount, or even less. But, by reducing the resources that are tied up in crypto trading, we will be freeing up resources for productive uses, even if the government is not collecting the money in taxes. Think of it as anti-inflation policy.

The good part of this story is that there really is no downside. When we tax things like food or gas, we make it more difficult for people to buy items that they need to get by. But who cares if it is more expensive for people to speculate with crypto?

The folks who run the crypto exchanges will be unhappy, as well as the celebrities who might get fewer dollars for their ads, but these people can instead try to channel their energy into something that is productive. People make money pushing heroin also, but no one feels bad about reducing opportunities in the heroin industry.

There also is a side benefit from a tax on crypto. It may get people to think more clearly about the financial sector generally. We need a financial sector to carry through transactions and to allocate capital, but we have seen the size of the financial sector explode (relative to the economy) in the last half century. This hugely bloated financial sector is an enormous drain of resources from the economy and a major source of inequality.

A tax on crypto can be a step towards implementing financial transactions taxes more generally. A tax on trades of stocks, bonds, and other assets would have to be far lower, since there would be an economic cost from eliminating these trades altogether. But we could have a tax of, say 0.1 percent on stock trades, which would just raise trading costs back to their 1990s levels. This would eliminate much short-term speculative trading, and could raise close to $100 billion a year.

We are very far from having the political support for a broad financial transactions tax, but perhaps the FTX meltdown can create enough anger to build momentum for a tax on crypto trades. It certainly seems like it’s worth a try.

Can Progressives Learn to be Opportunists?

The pandemic preparedness treaty and the crypto collapse might seem pretty far removed, but both present opportunities to crack down on major sources of waste and inequality in the economy. The right has been very clever in finding ways to undermine progressive structures and sources of power.

For example, they managed to destroy traditional defined benefit pensions by inserting an obscure provision in the tax code, which created 401(k) defined contribution retirement accounts. They hugely undermined manufacturing unions by pursuing fictious “free-trade” agreements, which subjected manufacturing workers to international competition, while protecting high-end professionals and increasing protections for patent and copyright monopolies.

The pandemic agreement provides a great opportunity to weaken patent monopolies and related protections, while increasing the prospect that billions of people in the developing world will be able to survive the next pandemic. The crypto meltdown provides a window through which people may see the enormous waste and corruption in the financial sector. It would be great if progressives could take advantage of these opportunities.

[1]This figure comes from the Bureau of Economic Analysis, National Income and Product Accounts, Table 2.4.5U Line 121. The calculation of the cost without patent monopolies can be found here.

Sunday, November 13, 2022

Don't Let Geopolitics Kill the World Economy

When advocating their interests in a globalized world, great powers should calibrate their trade and technology polices carefully, eschewing measures that are designed for the express purpose of weakening their competitors' development prospects. With its latest moves against China, America has failed this test.

CAMBRIDGE – At the Communist Party of China's 20th National Congress last month, the country's one-man rule under Xi Jinping became fully entrenched. Though communist China has never been a democracy, its post-Mao leaders kept their ears to the ground, paid attention to voices from below, and thus were able to reverse failing policies before they became disastrous. Xi's centralization of power represents a different approach, and it does not bode well for how the country will deal with its mounting problems – the tanking economy, the costly zero-COVID policies, growing human-rights abuses, and political repression.

US President Joe Biden has significantly added to these challenges by launching what Edward Luce of the Financial Times has appropriately called "a full-blown economic war on China." Just before the Party Congress, the US announced a vast array of new restrictions on the sale of advanced technologies to Chinese firms. As Luce notes, Biden has gone much further than his predecessor, Donald Trump, who had targeted individual companies such as Huawei. The new measures are astounding in their ambition, aiming at nothing less than preventing China's rise as a high-tech power.

The United States already controls some of the most critical nodes of the global semiconductor supply chain, including "chokepoints" such as advanced chip research and design. As Gregory C. Allen of the Center for Strategic and International Studies puts it, the new measures entail "an unprecedented degree of US government intervention to not only preserve chokepoint control but also begin a new US policy of actively strangling large segments of the Chinese technology industry – strangling with an intent to kill."

As Allen explains, the Biden strategy has four inter-related parts, targeting all levels of the supply chain. The goals are to deny the Chinese artificial-intelligence industry's access to high-end chips; prevent China from designing and producing AI chips at home by restricting access to US chip design software and US-built semiconductor manufacturing equipment; and block Chinese production of its own semiconductor manufacturing equipment by barring supplies of US components.

The approach is motivated by the Biden administration's view, on which there is broad bipartisan agreement, that China poses a significant threat to the US. But a threat to what? Here is how Biden expresses it in the preface to his recently released National Security Strategy: "The People's Republic of China harbors the intention and, increasingly, the capacity to reshape the international order in favor of one that tilts the global playing field to its benefit."

So, to be clear, China is a threat not because it undermines any fundamental US security interests, but because it will want to exercise influence over the rules of the global political and economic order as it gets richer and more powerful. Meanwhile, "the United States remains committed to managing the competition between our countries responsibly," which really means that the US wants to remain the unchallenged force in shaping global rules in technology, cybersecurity, trade, and economics.

By responding this way, the Biden administration is doubling down on US primacy instead of accommodating the realities of a post-unipolar world. As the new export controls make clear, the US has given up on distinguishing between technologies that directly help the Chinese military (and hence might pose a threat to US allies) and commercial technologies (which might produce economic benefits not just for China but for others as well, including American firms). Those arguing that it is impossible to separate military from commercial applications have won.

The US has now crossed a line. Such a broad-brush approach raises significant dangers of its own – even if it can be partly justified by the intertwined nature of China's commercial and military sectors. Correctly viewing the new US restrictions as an aggressive escalation, China will find ways to retaliate, raising tensions and further heightening mutual fears.

Great powers (and indeed all countries) look out for their interests and protect their national security, taking countermeasures against other powers as necessary. But as Stephen M. Walt and I have argued, a secure, prosperous, and stable world order requires that these responses be well calibrated. That means they must be clearly linked to the damage inflicted by the other side's policies and intended solely to mitigate those policies' negative effects. Responses should not be pursued for the express purpose of punishing the other side or weakening it in the long run. Biden's export controls on high-tech do not pass this test.

The new US approach toward China also creates other blind spots. The National Security Strategy emphasizes "shared challenges," such as climate change and global public health, where cooperation with China will be critical. But it does not acknowledge that pursuing an economic war against China undermines trust and the prospects of cooperation in those other areas. It also distorts the domestic economic agenda by elevating the objective of outcompeting China over worthier goals. Investing in highly capital- and skill-intensive semiconductor supply chains – on which US industrial policy currently focuses – is just about the costliest way of creating good jobs in the US economy for those who most need them.

To be sure, the Chinese government is not an innocent victim. It has become increasingly aggressive in projecting its economic and military power, though its actions have mostly been confined to its own neighborhood. Despite previous assurances, China has militarized some of the artificial islands it built in the South China Sea. It imposed economic sanctions on Australia when that country called for an investigation into COVID-19's origins. And its human-rights violations at home certainly do warrant condemnation by democratic countries.

The trouble with hyper-globalization was that we let big banks and international corporations write the rules of the world economy. It is good that we are now moving away from that approach, given how damaging it was to our social fabric. We have the opportunity to shape a better globalization. Unfortunately, the great powers seem to have chosen a different, even worse path. They are now handing the keys to the global economy to their national-security establishments, jeopardizing both global peace and prosperity.

Dani Rodrik, Professor of International Political Economy at Harvard Kennedy School, is President of the International Economic Association and the author of Straight Talk on Trade: Ideas for a Sane World Economy (Princeton University Press, 2017).

 -- via my feedly newsfeed

Dean Baker: Thomas Edsall Talks About the Elites Screwing the Masses, but It’s Much Worse than He Says


via Patreon

Thomas Edsall’s latest columntells readers how people in power, including many Democratic type people, have made decisions that have seriously worsened the situation of the 60 percent of the workforce without college degrees. While the basic point in the column is completely true, the column gets one important fact badly wrong, and hugely understates the extent to which the screwing of non-college educated workers was the result of deliberate government policies.

The fact the column gets badly wrong is the claim that “automation” has somehow sped up in recent years and is rapidly displacing less-educated workers. Automation is not a well-defined concept, economists would more generally talk about productivity growth. This is well-defined and we have good measurements of productivity growth going back to the end of World War II.

From the standpoint of an individual worker, or the economy, it doesn’t matter if their labor is no longer needed due to an assembly line speed-up, greater efficiency in organizing the workplace, or robots. In all three cases, fewer workers are needed. The obsession with automation as something new and different is completely misplaced.

If we look at productivity growth, we get the opposite of the story that Edsall and his sources are telling. In the last decade productivity growth has averaged just 0.9 percent annually. Productivity growth has been slow in the pandemic, but even if we take the decade from the fourth quarter of 2009 to the fourth quarter of 2019, productivity growth averaged just 1.2 percent.

By contrast in the years from 1947 to 1973 productivity growth averaged 2.8 percent. This was a period of rapidly rising wage growth, with pay for workers at the middle and bottom keeping pace with the overall rate of productivity growth.

The picture does not change if we just look at manufacturing. Productivity in manufacturing has actually been flat over the last decade. In the decade from the fourth quarter of 2009 to the fourth quarter of 2019 it rose at a 0.2 percent annual rate.

In short, the story of workers being rapidly displaced by automation, robots, or anything else does not fit the data. Furthermore, rapid displacement is not necessarily bad news for workers, as shown by the strong wage growth that accompanied the strong productivity growth in the decades following the end of World War II.

If we had a story where we were seeing rapid productivity growth, accompanied by rising inequality, then we could say that we face an unfortunate trade-off, with the cost of more rapid growth being higher inequality. But in fact, the opposite is the case. We see very slow productivity growth accompanied by rising inequality. It is not clear what gain we are supposed to be getting for this increase in inequality.

Not Free Trade

The other part of Edsall’s story is 100 percent accurate. We designed trade policies to put our manufacturing workers in direct competition with low-paid workers in developing countries. This cost us millions of manufacturing jobs and put huge downward pressure on the wages of workers who still held their jobs. As a result of the massive job loss due to trade, the wage premium for working in manufacturing has largely disappeared.

But this policy was not “free trade,” as Edsall says. We made a conscious decision to put manufacturing workers in direct competition with much lower paid workers in developing countries, while continuing to protect more highly paid workers. We could have designed trade policies that would have made it much easier for doctors, dentists, and other highly educated professionals in developing countries (and rich countries) to come to the United States and compete with our professionals.

This would have offered large gains to the economy, as we could have saved hundreds of billions of dollars annually paying less money for these professionals. Our trade negotiators never pursued this type of free trade because doctors and lawyers have far more political power than steel workers and textile workers. As a result, we structured trade in a way that redistributed a huge amount of income upward and pretended that it was just the natural course of globalization. But wait, it gets worse.

Government-Granted Patent and Copyright Monopolies

The fact that some people (those with college and advanced degrees) are better positioned than others to benefit from advances in technology is not an accident. It is by design. The reason that these people are able to be winners from technology is because the government grants patent and copyright monopolies for innovations and creative work. Over the last four decades it has made these monopolies longer and stronger, which increases the amount of income going to those in a position to benefit from them. (See my discussion in chapter 5 of Rigged [it’s free] or here.)

As a result, a massive amount of income has been redistributed upward. This has made a small number of people tremendously rich, such as Bill Gates, whose fortune depends on the government’s protection of Microsoft’s patent and copyright monopolies. It has also allowed millions of others to earn far higher paychecks than if these monopolies were weaker, or if we relied on different mechanisms for supporting innovation and creative work.

The recent experience with Moderna and its Covid vaccine illustrates this point perfectly. The government paid Moderna $450 million to develop a vaccine. It then paid another $450 million for its final phase 3 clinical trials that provided the basis for the FDA's approval. It then allowed Moderna to have control over the vaccine. The result was that we got at least five Moderna billionaires as its stock price rose by tens of billions of dollars. Undoubtedly, many other Moderna employees became millionaires, although probably not the people who serve lunch in its cafeteria or clean its toilets.

Of course, this money comes from somewhere. We pay about $400 billion a year (around $3,000 per family, each year) more for prescription drugs because the government provides patent monopolies and related protections. We pay around $100 billion a year more for medical equipment and several hundred billion more for computer software.

This is all money out of the pockets of non-college educated workers. And when the big winners in this story decide to spend their money on houses and other items, we get the inflation we are seeing today, which apparently has everyone so upset.

The key point is that this is all by design. We could have told Moderna that we are going to pay them to develop its vaccine, but then everything is in the public domain. Anyone, anywhere in the world can manufacture it. Furthermore, its non-disclosure agreements with its engineers are unenforceable. This means that they could all sell their services to anyone who wants to pay them to set up manufacturing facilities.

In this alternate universe, the key people behind developing the vaccine would almost certainly be well-compensated, but we would be talking millions, not billions. The decision to structure our rules on technology, so that a relatively small segment of the population could benefit hugely at the expense of everyone else, was a political choice. It was not something that technology did.

This is what I refer to as “the Really Big Lie.” The idea that somehow globalization and technology developed in a way to screw workers without college degrees and it just so happened that more educated workers were big winners. And, many of the more educated workers are good liberals, so they would even be willing to pay higher taxes to help out the losers with various social programs.

Given this reality, is it surprising that the people who were screwed would be angry at the “winners?” To be clear, I am sure that almost no one among the angry non-college educated has given any thought to government-granted patent and copyright monopolies or the protection from competition that their doctors enjoy.

Why would they? These points are almost never made in major news outlets and politicians like Trump push racist stories about lazy Blacks and immigrants ruining their world.

But these people are absolutely right that they have been screwed by policies pushed by an educated elite. It is tragic that they see an outlet for their anger in going after the most disadvantaged segments of society, but they do have a real basis for their anger and perhaps some day this fact can be discussed in outlets like the New York Times.

Thursday, November 10, 2022

 A good question, Maicol David Lynch. And, an important one for socialists, especially Marxists.  However, the Gramscian "specific conditions" obtaining for a particular socialist government suggest there may be more than one answer to your question.

It seems to me there are a number of variables to think about in finding a "model" for socialist leadership. This is my understanding:

Variable 1: What is socialism?

There is an economic, and political answer. 

For both Marxist and non-Marxist theories of socialism, the state -- or some non-profit oriented proxy, supplants private enterprise in degrees and proportion based on (at least) these assumptions:

a) that abundant resources, and abundant production and financing capacities of industry make it possible to reduce the "prices" of the "means of life" toward zero, where little or no profit, no retained earnings, no money is required. If there are costs they are born by general taxation.
 b) The "means of life" become public goods, meaning they neither exclude shared use nor have any rival for universal, "free" provision of the good. The ratio of public to private goods is a good measure of the degree of economic socialization.
c) The "means of life" becomes increasingly expensive as both physical and social reproduction of human societies requires a rise in human capital -- the knowledge and capabilities to be fully productive in advanced society. One can thus expect "abundance" to spread gradually, perhaps never fully satisfied. Investments in education and training must be accompanied by cultural revolutions in work and leisure life that also are expensive, controversial and disruptive under the best of circumstances,  and inevitably contrary to many 'traditions' as past gender, family, age, nationality, racial and ethnic roles are challenged. 


The point is: progress toward "abundance" will be gradual, and measured, no matter how revolutionary the changes in political or state leadership may be. Progress in economic relations requires careful planning and development. Shifts can take decades to become pervasive in an economy even when they are fast moving. (Consider the use and regulation of cell phones combined with the Internet) Many outcomes are impossible to predict in advance. All investments in the future have RISKS of failure. 


Of all early expressions of socialism, only Marx's has stood the test of history. The countries that call themselves socialists are all strongly influenced by, and contributed extensions and expansions of Marx's key concepts. Among the key conc

**For modern non-Marxists, "socialism", or its real life expressions -- "social democracy" and "democratic socialism" -- is pretty much summed up as an effort to perfect the democratic values promised in most, not all, bourgeois revolutions, from the American revolution forward.

The democratic socialist aspiration for "a more perfect union" struggles constantly against the inequities of developing capitalist relations, and strives to offset or compensate or restrain destructive social and political  tendencies arising from market anarchy.

But it does not reject "market" relations, as in Utopian or Anarchist conceptions, like Robert Owen 19th American experiment. Given the vast wealth being socially created by capitalism,  such "rejection" was entirely Ideal -- as contrasted with Marx.

In earlier times most "social democratic" formations in Europe were Marxist in one form or another. Some saw Marx's effort to be "scientific" about socialism as meaning a natural, more or less smooth, evolution toward perfection requiring no extraordinary personal subjective effort.

The history of socialism as a political trend since Marx and Engels wrote the Communist Manifesto has often been consumed with debates over which approach to socialism was Utopian, and which was "scientific".