Wreckage

This picture is a treasury of symbolism and metaphor.

Helpless on its side, with an enormous hole torn in its hull, this disaster has already killed more than a dozen people who only wanted to have fun for a few days, ruined the career of the captain and possibly headed him for time in the slam, dented the balance sheet of some insurance companies, and dinged confidence in the whole cruise industry.  The bleeding isn’t over. See the pathetic little line of boom strung out along the shore? The ship is liable at any moment to slide off its rock and go underwater, and it’s full of bunker oil ready to foul beaches for miles.

What does it stand for…better, what in today’s news doesn‘t it remind us of!  The world economy, run aground by expert leadership who just wanted to show off  how rich they could get?  The American political process, set up for disaster by the Supreme Court and mismanaged by ideologues who think the only reality is what they can see above the surface of things (charts? we don’t need no stinkin’ charts!), with more pain and damage looming?  The Perry campaign, vacuous glitter and rhinestone bling dead in the water?

This picture is a non-rival good, and serves any of those purposes, feel free. But my first association was with something that, if possible, is even more completely broken and more threatening than any of these: the economy of digital content.  The wonderful structure of copyright, distribution, royalties, law, conventions, and contracts that brought us stuff to read, see and listen to for so long has sailed right into the very well-charted rock of virtual embodiment.  Some pieces of it are still above the waterline, but they don’t work.  And everything – everything – we are contemplating to do about it has about as much hope of success as that pathetic boom.

No, I didn’t steal the picture; it’s a public domain Italian government satellite photo. But all the other pictures floating around the web are also non-rival goods, just like the songs and video files Megaupload is being taken down for circulating, and just like this blog post.  The right price to consumers for all this stuff is zero.  Most of it, especially with some attention from kids in Finland and Bulgaria and who knows where else, is also non-excludible in fact (I could have posted any of hundreds of copyrighted pictures of the Costa C. here and not been punished for it, nor you for looking at them).  That battle is over and the technological facts have won, though there’s plenty of pointless damage yet to be inflicted as the content industries try to make gravity point up.

The right price to creators and providers is not zero.  Pretty simple design constraints, right: give content to consumers at a price of zero, and pay musicians, writers, and the like an efficient and just non-zero price to make it for us.  Simple constraints don’t mean it will be simple to solve the problem, of course, but all the flailing about we’re doing with no good effect on this one is not a counsel of despair.  Very similar problems have been solved quite nicely already, like the sidewalk I’m allowed to walk on for free and the park, whose gardener is not enslaved, but actually earns a nice civil service union wage. And all the clean air I can breathe at will that was quite  expensive for the power plant and my car-driving neighbors to provide for me, and the complete absence of nasty foreign occupying armies provided by a military that pays its workers and ponies up for tanks and all the other gear.

One might think we would be figuring out how to sail our priceless, glorious social capital ship of art and knowledge safely past these technical rocks. But we aren’t; we spent two or three decades arguing in the wheelhouse about whether citizens who just want to get smart and hear some music are pirates, and whether the earth could be flat if we just shout “property” loud enough, and refusing to look at charts that might be useful, and now the ship is wrecked. It will probably be harder, not easier, to right and refloat the longer we wait, and while we yammer about property rights and assigning blame, a large ugly plume of yuck is going to keep spreading across our civic life, as the content that does get provided is bought for us by the people who can afford to put it out under our broken system.

 

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

21 thoughts on “Wreckage”

  1. Did I miss somethiing while I slept last night? Was this settled in some far-Eastern time zone while I, blissfully unaware, dreamed of Wikipedia back on-line?

    Last I heard there was a fierce debate underway, with smart people on both sides of a complex set of issues. Isn’t the hyperbole of this post a little premature?

  2. I think you need more than some clever words to convince people that communism is the solution. Copyright has enabled huge industries producing astonishingly innovative and valuable products. When you have a solution that doesn’t look like it’s been designed by Trotsky, then you get to call the current system broken.

    1. I can see some implied socialism in Mike’s recommendation – and BTW Soviet-style socialism did provide cultural goods on a large scale and with some success, Bolshoi and Kirov ballets, Berliner Ensemble, Rostropovich, Pasternak, chess masters. Where’s the communism, apart from the implacable zero-marginal-cost logic, and the reality of the contemporary gift-exchange Internet?
      More ruminations on this important distinction from me here and here.

      1. It’s communism because he is saying that the fruits of any producer of copyrighted works labour do not belong to them, they belong to everyone, and it is up to the commons to compensate them in some way.

        It’s not just about “cultural goods”. There are multiple billion dollar industries that have somehow survived for decades despite the “implacable zero-marginal-cost logic” you refer to. They are some of the most successful industries of modern times. To blithely give in to this “implacable zero marginal cost logic” without even working out how to make these industries continue to bring the benefits they have seems defeatist.

        Given Michael was an architect and engineer he should know perfectly well how much the copyrighted software industry has transformed the productivity of modern designers. How would Michael fund the development of architectural design tools in his brave new world?

        Call it Soviet-style socialism if you prefer that term to communism. Any economist knows the problem here is how do you allocate resources to the production of goods that are zero-marginal-cost to produce for anyone in possession of a copy. Copyright is one answer, restricting production of the good to the original creator. It’s not enough to just point out the problems with copyright without positing a credible alternative. Given the experience of the Soviet union, and every single government software project ever, I don’t think airy appeals to defence or sidewalks cut the mustard. I mean, a government industrial policy for software production – that hardly sounds “reality based” to me!

        1. It is Economics that has run aground and sunk, driven onto the rocks of stupidity by a pilot determined to steer by light of moral causality.

          There’s a strong tendency, despite occasional admonishments to the contrary, to see economics as a morality play. As Anonymous demonstrates, it is a view of things that comes with the passionate strength of righteousness.

          A more dispassionate, and functional view, is that information, per se, is simply not a factor of production, not an input in the production function, and, therefore, not something scarce that must be accorded a share of income from the efficient production and distribution of output. It seems puzzling and somehow, not “right”, but it is correct.

          The functional “solution”, so to speak, is to recognize that information and knowledge changes rents. The sunk cost of building a road cannot be efficiently recovered by artificially increasing the marginal cost of using the road. It is in some important ways an analogous problem to recovering the sunk cost investment in information and knowledge, but we are already familiar with the solution. We recognize that building the road will increase the value of adjacent real property, and we finance road construction partly from property taxes (but road repair and maintenance from gas taxes and vehicle registration taxes, which are a good approximation of use taxes). That analogy is a good place to start thinking about this problem.

          P.S. Better socialism than corporate feudalism.

          1. Nothing in my post was really about some kind of “moral causality”, but you chose not to engage with my point, which was principally about resource allocation.

            Everybody knows copyright has problems in this age of the internet (though I think they are overstated), but your argument, and that of the original poster, doesn’t seem driven by this, but by a dislike of copyright as a mechanism itself, using the excuse of the “failure” of the system to avoid the need to offer a credible alternative.

            You can start with the analogy to roads, but that doesn’t really answer the questions. Obviously some informational goods can be effectively provided by the state at zero cost. Others can be provided at zero cost based on advertising or volunteerism. Others can be provided without requiring copyright to obtain revenues as part of a larger service which contains some non-zero marginal cost elements. This is all happening, right now.

            However, informational public goods have some important differences frrom roads:

            1) Differentiation. Two outwardly similar roads will offer similar utility to each other, and different users will not derive significantly different utility from either road. Two outwardly similar pieces of software, or books, or music, might offer radically different utility based on product quality, and different users might significantly prefer one or the other based on their requirements.
            2) Innovation. The need for roads is relatively easy to anticipate. The need for software is not – entire new industries have sprung up, and within those industries there is continual improvement, driven by competition, in terms of what functionality to offer.

            Simply put, the vast improvements in quality of informational goods over the last 100 years have largely been driven by competition. The vast innovations have largely been driven by the ability to capture rents before competing products can be brought to market. The vast diversity has been driven by a large number of producers, all hoping demand for their unique product will be high. In many industries this all hangs upon the copyright mechanism as a way to realise rvenues. If you propose to do away with that, (and I understand the reasoning) you need to suggest some form of alternative mechanism to achieve at least some of these ends.

            P.S. France, Spain and Italy, hardly bastions of corporate feudalism, all charge tolls for motorway use. Many bridges and tunnels in Europe charge tolls. Even in your chosen example, charging for the zero-marginal-cost good is alive and well.

  3. Homer sang for his supper. Performance, patronage, gift exchange, “shirking” (Wikipedia was built with time stolen from employers), altruistic volunteering, and of course wage-paying socialism: the resources of civilisation are not exhausted. Cheer up!

    There’s more to art than disembodied information, just as there’s more to perfume than the overpriced essence in the bottle.

    A possible model is the traditional Humboldtian research university. To a first approximation, what the academic staff want to do is research. The deal on offer is that they get to do this provided they pay a dissemination tax: usually teaching, but it should include blogging and other forms of popularisation.

    In France, a successful vocational training system is funded by a 2% payroll levy on employers. They can deduct their in-house training expenses, so it amounts to a Pigovian tax on free-riders on others’ investment in human capital. (It’s imperfect as little stops some firms from creating fake or padded “training” programmes run by cousins, but as this is a waste of stockholders’ money, the problem is contained by market forces.)

    The same “play or pay”principle could be applied for art and science.

  4. “… two or three decades arguing in the wheelhouse ..” I’m trying to figure out how to insert the pretty young Moldovan woman, not on the passenger or employee list, who was in the wheelhouse at the time of the crash … into your story. It’s a good story.

  5. As everybody and their cousin in the last-mile business puts caps on bandwidth and manipulates their networks so that quality of service depends heavily on preferential-access agreements (and payments) I think you might want to revisit the “marginal cost is zero” part of this argument. The marginal cost is small, but it is nonzero in the aggregate, and making it nonzero at a finer grain might actually be useful.

    1. “As everybody and their cousin in the last-mile business puts caps on bandwidth”
      Speaking of hyperbole…

      Caps on wired broadband are uncommon (at least in the US) and non-onerous for the VAST majority of the population.
      Caps on wireless reflect fundamental physics, and all the whining in the world is not going to change that.

      1. Caps need not be de jure to be effective, as Comcast so clearly showed. And I’m not whining, but rather pointing out that one of the basic assumptions of the information-wants-to-be-free argument, namely that copying and transmission have zero marginal cost, isn’t really accurate. And suggesting that that could be used as a feature rather than a bug.

  6. Maybe the solution isn’t restricting access to artistic content, which is the preferred solution of the RIAA, MPAA, etc, but flooding the market with it?

    Let me explain. Yes, the internet allows virtually free distribution and access to essentially anything that can be digitally reproduced. But users don’t want (only) access, they want access to the good stuff. And they will pay to find out what the experts they respect think is good – and the experts will compete to provide quality advice. Especially if there’s such a flood of content that consumers are willing to pay something to get some help separating the wheat from the chaff.

    So consider a model where certain sites are aggregators, magazines, call them what you will. They make money by selling subscriptions or advertising. They in turn pay artists & other producers – not for exclusive use of their content (which is impossible) but for enhanced use: first shot at new outputs, commentary tracks, interviews, behind the scenes, whatever. Sure, that stuff too could be disseminated elsewhere. But the point is, people will pay to see the good stuff in one (respected) place. And advertisers will pay for the eyeballs of the people who want to see it there. In other words, the aggregators wouldn’t sell exclusive access, but expertise. And the artists actually wouldn’t mind widespread free distribution, as long as this generates buzz and attracts the interest of (paying) aggregators.

    We’re already halfway there already. Why not make the internet a freer, more interesting, more democratic place by going all the way?

  7. Why we tax: isn’t this what O’Hare’s post is about? Or maybe my not being an “academic” makes me too rube-like to quibble sensibly over marginal costs, zero or nonzero. What I know is that precious few among those who get the chance to occupy the wheelhouse have even tried to remind the taxpaying public why paying taxes is in everyone’s best interest. Jerry Brown’s State of the State didn’t address it head on, but he at least reminded his listeners that some of us still have visions for California beyond “winning” yet another tax cut.

  8. I predict that a hundred years from now, if we don’t exterminate ourselves first, the notion that anyone ever believed that he could “own” his performance of a song will seem so crazy that only the most dedicated history nerds will be able to understand why anyone ever thought that way.

    1. Brand’s Law: Information wants to be free. Corollary I: It does indeed, and while it loses some battles, it tends to win the wars. Corollary II: “Intellectual Property” law and systems must be grounded in the technology of the time, or they are doomed. Commentary: “Intellectual Property” is one of the most insidious euphemisms around even though it was probably not invented with the consciously manipulative intent that is often characteristic of malign euphemisms.

  9. The problem, Mike, is that the coercive taxation and regulation that pay for public goods don’t work so well here. The sidewalks and clean air are relatively non-controversial (except in the South and West, on both counts, but even there people who prefer pollution and no-sidewalks can get what they want by moving to communities with a habit of not paying for the relevant public goods). Art and entertainment are a different matter. I don’t mean that some images are offensive; I mean that we don’t agree on which images make us happy and which music entertains us. The usual way we’ve settled this is to let each of many diverse consumers pay a small price for what pleases him or her. Having a government bureaucracy fund artists is not so simple. If we have panels of artists and journalists decide what shall be funded, we’ll get content that most people won’t want (and will eventually not want to fund). I suppose we could give each taxpayer a thousand points and let them allocate their preferences across sources of art, music, and journalism that they prefer. But the problem isn’t easy. Fortunately, I think James is right that a radical all-or-nothing choice is neither coming, nor needed, right away.

    1. I’m chiming in on the problem of choosing art to support without the market giving the signal. Joe Stalin and the Beeb – and the Dear Leader – are my examples for the state choosing the culture which will be supported. The Moscow Radio Orchestra has now fallen on hard times, and Russians are choosing to spend their money on screeching Russian Rap stuff… I doubt the Pyongyang market would choose quite so much in the synchronized stadium display line, if the Norks could actually decide what performances they liked.

      How would you do a shadow market, to compensate people for making the performances which the public actually likes? You could make downloads free, and count how many were of which artists? Count telephone requests to radio shows? In 2003 Norah Jones got Grammy, beating Britney Spears! This was because geezers like myself were actually buying CDs, the kids were trading MP3 files, so Britney was eclipsed in what was measured. I actually like Norah Jones a lot, Britney not so much, well, like the Dear Leader I’m not unhappy to substitute my taste for that of the masses.

      In my county we have a ‘1% for Art’ requirement on new buildings. So there are a lot of 1% sculptures around. I think they tend to be afterthoughts, chosen by a committee. Many are utterly dreadful.

  10. Let me point out an attack on access to public information that seems to have gone under the radar: HR 3699
    http://www.govtrack.us/congress/bill.xpd?bill=h112-3699

    This bill is aimed at overturning an NIH requirement that papers paid for with NIH grants be made available to the public, who paid for the research, after 12 months.

    Note this is overturning copyright claims by the public for research results they paid for with their taxes and removing this research from the common good.

    Publishers are not satisfied with the solution some have taken where the author’s manuscript may be posted at PubMedCentral and publisher keeps the Published, page numbered, version. Publisher’s marketers know that providing the link on their web site drives sales of articles within the 12 months plus preprint period which already stretches their sales period to 14 to 24 months. [BTW per article prices for biomedical articles are typically $35 each.] Publishers want to sell everything at $35 to $75 an article.

    Moreover, publishers are scared to death that the huge success of PubMedCentral and National Academies Press opening access will lead to the entire federal grant system to follow. NSF, DOE, DOEd, DOD, NASA, DOA and the list goes on and on.

    The sort of publication by the academy being proposed here, the Humboldtian model described above, is being outlawed by this bill.

  11. “better, what in today’s news *doesn‘t* it remind us of!”

    Great writing, and an analogy I plan to shamelessly steal and re-use. WIth attribution where possible, and not, else.

    I realize that my comment cannot help but being read as a comment on the IP problem. But actually, I am just trying to tell Prof. O’Hare how much I loved the intro.

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