Framing the Market

Market failure diagram showing deadweight loss

Market failure diagram showing deadweight loss (Photo credit: Wikipedia)

I’m tired of  the market hype from the right and the left. The 1% relentlessly pushes a free market (invisible hand) mythology and the left has begun pushing a post-market (new-age invisible hand) mythology. Each form of market/anti-market fundamentalism will fail for the same reason: denial and wishful thinking (two sides of the same coin).

Is the market guilty as charged, or has it been falsely framed by both sides?

MYTH: The Free market.

FACT: There is no such thing as a free lunch or a free market. Every market is manipulated by the strongest players. The private sector cheats, steals, lies, and bullies. The state regulates according to a mixed set of public and private interests. If those interests get out of balance, either the public or private sector (or both) will suffer.

“Markets are not provided by nature. They are constructed — by laws, rules, and institutions. All of these have moral bases of one sort or another. Hence, all markets are moral, according to someone’s sense of morality. The only question is, Whose morality? In contemporary America, it is conservative versus progressive morality that governs forms of economic policy. The systems of morality behind economic policies need to be discussed.”    AlterNet / By George Lakoff and Elisabeth Wehling

MYTH: The Invisible Hand.

FACT: There is no such thing. There are only real, material “hands” that we either cannot or will not look at.

MYTH: Government is the problem, not the solution.

FACT: The solution is maximizing utility through appropriate checks and balances. Government has a role in 1) providing regulatory counter-balance to private concentrations of power which amplify the cheating, stealing, lying, and bullying; and 2) socializing some of the costs of education, R&D, infrastructure, public safety, national defense, etc.

MYTH: Markets are the problem, not the solution.

FACT: Ecosystems behave like economies with markets. Natural markets tolerate large amounts of power asymmetry (aggression) and information asymmetry (deception). What is not found in a natural ecosystem is an externality. They do not exist there. Externality in human economics is an entirely abstract fiction. An externality is where someone gets something for nothing and gets away with it indefinitely. That doesn’t happen in an ecological economy. If it did, all life would probably be extinct.  Instead, nature is stubbornly resisting and postponing its extermination at our hands. It actually doesn’t happen in the real human economy, either. It only happens in human economics, which is riddled with a variety of naive or intentional accounting errors which are generally explained by economists as externalities or market failures. Naturally, externalities and other accounting errors inevitably produce market failures.

MYTH: Living systems are not machines.

FACT: Living systems are at least in part machines, or they are at least in part LIKE machines. So living systems and machines have some things, if not everything, in common.  They need inputs, they have outputs, and they have interlocking working parts, many of which are essential for their continued operation. Living things may not be 100% material, if you like, but they are material enough to be subject to the laws of nature. Whatever else they may be, living systems work much like machines of comparable complexity.

Post-market theology

I won’t dwell on the myths of “economics as if only the 1%  mattered,” because they are now fairly well understood by many. We have given the invisible hand a very long trial. It’s had some episodic success but it is now failing badly. But there is lately a “new age” invisible hand that some are appealing to as an alternative.

I recently published a piece with the alternate title of  “Escape from the Planet of the Economists.” In that piece I made a case for “economics as if people mattered” and “economics as if the biosphere mattered.” I drew from writers like E. F. Schumacher who argue that the human economy is part of the ecosystem, not vice versa. This is currently being called sustainable or ecological economics. I completely agree with the particular arguments of the particular authors I cited. But some economic pundits are embracing this general framework without adequate understanding of what the ecosystem is or how it works, and without adequate understanding of what markets are or how they work. They seem fairly sure that you can’t shoehorn nature into a marketplace, and fairly sure that that one idea explains everything.

The premise seems to be that since the market has not historically conserved and enhanced the biosphere, the biosphere must work on non-market principles. The problem is that the second conclusion doesn’t necessarily follow from the first. It is a non sequitur. First, the nebulous thing we often call “THE market” doesn’t exist. Instead, the economy is an aggregate of many markets. Because many (or nearly all) of these markets are distorted or flat-out broken, it appears that markets per se are unworkable. Its as if someone in the middle of a vast junkyard of broken cars concluded that all cars were inoperable. In fact, with the right knowledge and tools, many of those cars could be fixed. But my imaginary character doesn’t have that knowledge. He doesn’t have the right tools, either.

If the first error is a false analysis of the problem, a second error inevitably follows–a false solution. The reason all the old cars (and old markets) in the economic junkyard are broken is that they were not maintained in a responsible fashion because they were only on temporary lease to their operators. Lets say all those irresponsible operators were just following the example, and sometimes the advice, or direction, of their betters, the 1%.

And now this two-faced 1% is getting caught in the act of green-washing their activities. They are pulling the strings of their politician manikins, sending them to international summits on hunger or the environment or global warming, campaigning for austerity or resource management schemes full of tricks and loopholes big enough to drive a fleet of deep-water drilling platforms through.

Many conclude that these amoral capitalists have nothing to offer but more waste, fraud, exploitation and abuse. Which is pretty much the case. So its only natural for a movement to gravitate around respect for the 99% and for the environment, and then go looking for post-market methods for shaping society and finding harmony with nature. They turn to gift economies and sacred economics drawn from mankind’s romanticized past, or imagine societies that function on harmony and good will instead of greed and accounting. They may be inclined to imagine bountiful commons that manage themselves the way nature manages itself. I’m sympathetic to the sentiments and the philosophy, but that doesn’t satisfy me. I want the skills and the tools to get broken markets and broken ecosystems back on the road to thriving.

GB.MEX.10.0143

GB.MEX.10.0143 (Photo credit: balazsgardi)

Of course what goes by the name green often isn’t (including some versions of “green economics“), and the only solution for that  is eternal vigilance against green-washing. “Big Green” would be dumb not to appropriate certain language from Natural Capitalism, for example–its just so easy.

“When plunder becomes a way of life for a group of men, they create for themselves, in the course of time, a legal system that authorizes it, and a moral code that glorifies it.” – Political economist Frederic Bastiat, The Law [1850]

We are well-advised to be wary of giant green snakes and wolves in green clothing sneaking into the people’s garden; but not to be prejudiced against all applications of  market thinking in ecological economics. Is there any reason the 99% cannot “occupy” and democratize markets?

I can believe that the United Nations Environment Programme (UNEP) and the Reducing Emissions from Deforestation and Forest Degradation (REDD) projects are (or are not) clever tricks to disguise continued exploitation. Either way, the effort to scientifically quantify natural systems, as in  approaches to sustainable or Natural Capitalism, is not in itself a sinister scheme. It is required for good management of any system, whether fishery, forest or farm. No doubt the language of pending high-level agreements may be obfuscating some ulterior motives. I’m very skeptical of trading permission-to-pollute credits. But what is often proposed as the alternative is not exactly transparent, either.

Here is a fairly typical example from a writer who rejects Natural Capitalism and similar approaches because he fears a slippery slope to green-washing. He proposes an economic system based on:
  • peace, harmony and balance among all and with all things;
  • complementarity, solidarity, equality and social and environmental justice;
  • collective well-being and the satisfaction of the basic necessities of all;
  • recognition of human beings for what they are, not what they own;
  • elimination of all forms of colonialism, imperialism and interventionism
There are lots of ambiguities there. Such ambiguities can easily morph into obscurities and obfuscations which can provide cover for abuse and exploitation of people or natural capital or both. Not even the ban on colonialism and interventionism really holds up to analysis unless we go back to being hunter-gatherers and stop colonizing or intervening in nature. As one of my peers pointed out to me recently, appeals to optimality are really arguments that we’re living (or will be)  in the best of all possible worlds; or would be if only we’d regulate or deregulate or something.
Inquisition 2.0?

How will we draw the lines between good-faith green economics and green-washing? No simple answer, but that’s the kind of thing that empirical science, at its best, can be good at. The alternative to science may be a kind of post-market fundamentalism whose dogma demands belief in a new-age invisible hand. I am already seeing omens of an Inquisition 2.0 which will torture disciples of sustainable capitalism until they confess to sins of  green-washing and recant their faith in science.

An ecological moral philosophy is useful, but a new version of the invisible hand (even a spiritual one) is not. A real science of sustainable economics is needed regardless. Such a science won’t be achieved just by good will and wishful thinking. It will require deep observation, painstaking metrics, statistics, and very complex accounting.

Confusion of tongues

The original Green Revolution was guilty of so many sins it may have cast a permanent cloud over the word “green”. Modern corporate and political green-washing darkens that cloud even more.

The battle for the soul of the word green reminds me of the confusion of tongues (confusio linguarum), the fragmentation of human languages described in the Book of Genesis 11:1–9, as a result of the construction of the Tower of Babel.  And George Orwell charicatured the authoritarian appropriation of language with  Newspeak in the novel Nineteen Eighty-Four. In the novel, it refers to the deliberately impoverished language promoted by the state. (Wikipedia)

I’m not convinced that the left is not impoverishing the conversation on sustainability in another way with its glittering generalities about sacred economics and effortless abundance.

In a nutshell, without the rhetoric, the  moral or spiritual approach to economics boils down to:

  • reducing the scale and scope of markets
  • expanding the scale and scope of the commons
  • putting more emphasis on the public sphere

All that really means to me is there is no unitary, all-encompassing market and certain things aren’t on the auction block. Markets shall have circumscribed scope or boundaries, including appropriate regulation and no more archaic, grandfathered externalities. But the notion that everything should evolve from markets toward something else is pure speculation. Well-regulated, democratically-managed markets might be natural and desirable even within many local commons. An agricultural land trust might want a big, bustling produce market, and why not?

What we must add to the moral philosophy is an ability to mimic the balance between steady-state and development in living systems.

We need to start seeing markets, commons, and ecosystems alike as complex adaptive systems requiring appropriate (e.g. transparent, dynamic, and democratic) constraints and regulatory mechanisms both internal and external. We need to see them as layered, overlapping, recursive, and locally differentiated by environemntal niches.

These systems are almost unfathomably complex and I wager that all our current models and subjective interpretations barely begin to scratch the surface of the objective reality. Any notion that we can re-engineer the whole market ecosystem from the top down is the height of hubris. Instead it will take a great deal of inspired trial and error from the bottom up and from the inside out.

In our efforts to upgrade our economic consciousness, plenty of kumbaya will be essential, but it won’t be sufficient. Humanity cannot live on love and peanut butter alone.  I think many of the innovators  who will fertilize the science and technology of sustainable markets may come from the highly experimental (and less theoretical) hacker, re-mix, peer-to-peer (p2p), and open source cultures.

Ecological economics can also be thought of as integral economics, a framework that includes but transcends existing fundamentalist market frameworks, integrating local econo-diversity with global interdependence–i.e. reinventing economics for people and place.”

Neither markets nor economic anarchy seem to scale well by themselves. But I think they might scale indefinitely in balanced proportions.

Poor Richard


ADDENDUM

Robert Ryan is a Graduate Student Assistant at the University of Pittsburgh. Class of 2013 · PhD · Structures and Foundations · Business Environment, Ethics, and Public Policy · Strategic Management

This is my online interview with Robert Ryan on 5/22/2012:

Poor Richard: Robert, I’m curious what you think of my very unscholarly take on markets and green economics in “Framing the Market.”

Robert Ryan: The simplest way to summarize this problem is “optimization under constraint”. In the same way that engineers perform constrained optimization problems, it is generally assumed in markets that individuals do the same, each using the same rationale as an engineer of their own personal consumption functions. Markets (here we are referring to idealized, perfect ones) are non-coordinated mechanisms for spot transactions to optimize utility under budget constraint. What this generally means is that the only two important variables are individual level preferences and budgets. As you have mentioned, this doesn’t hold true if you have more important variables like information, time, transaction costs, bargaining power, etc. Simply put, there is no “environment” in traditional market models, period, which is what separates them from evolutionary ecosystems. Ecosystems aren’t just individuals. There are group level dynamics where individuals interact with “BOUNDARIES” of the system. For example, consider how tides in a sandbar ecosystem is a boundary condition for the survival of a population of sandbar-dwelling animals. The very existence of tides shapes behavior. The list of natural system boundaries for markets include, but are not limited to: Rationality (what Herbert Simon called bounded rationality)…environmental entropy and finality (in the sense that some resources tend to be not only scarce, but decaying and non-renewable, and that some resources have critical inflection points where they pass between sustainable in supply and not……power (which is delineated by human institutions, including knowledge, law, etc.)…technology (which is the level of possible combinations of resources to create final goods)….etc…..notice that all of these constraints can be put into the economic system, but economists struggle to do so because of the complexity problem causing indeterminacy (the mathematics of chaos takes over, essentially, when everything ids dependent on everything else recursively). The simplest way to escape the problem of chaos is to hold some things constant over time. So, this is what people do to solve problems- hold things constant that may or may not BE constant. Their biggest error in the modern age occurs when hey hold constant essential SUPPLY SIDE problems, such as pollution externalities being ignored. An externality as you defined it is not quite right. An externality really is when one individual’s action that maximizes THEIR preferences impacts the entire economy negatively. For example, if a polluter pollutes, everyone else picks up the tab. The simple way to deal with externalities is to regulate against them, but that requires common agreement among everyone in the regulation.

Poor Richard: Robert. I appreciate and agree. Could I add your remarks as a comment to my blog post? (I was being a little flip with my definition of externalities. Maybe I should tweak it.)

Robert Ryan: Many people don’t know that economists indeed do solve such problems. The most popular field of economics for dealing with this problem is the economics of contracts. A market is a special case of contracts where all tricky bits are held constant. However, contract economics is generally specified so that you can account for ANYTHING. But, the math is really tricky for even the simplest of contracts. Contract economics presumes a bunch of agents are trying to negotiate a solution to an economic problem, and at least one of them is a principal. This is basically the mathematical representation of social contract problems: “we all get together before birth, or before the veil of ignorance, and devise a social contract to solve problems” – is how my professor Lawrence Ales puts it. For example, there may be some golden ratio of consumption of farmland that if you pass beyond you begin destroying future farm output. In order to prevent this, the principal is granted the ability to distribute to farmland (forming your constraint) and then the agents can auction for their slice of production. In this fashion you cap the use of farmland. Easier said than done, because it is hard to know exactly how this problem works in the real world–the chaotic inter-dependencies of the precise use of farmland and the precise use of other kinds of resources (water, air, etc…what technical combinations are employed in production, etc. ) are hard to know, and the equations of their interdependency are recursive. Carbon caps are an attempt to do exactly this, and the logic for it comes from contract economics, not market economics. To summarize again, you can solve these problems one at a time by holding other problems constant, but you get the “law of unintended consequences” even in contract economics in a complex world. Solving one problem can often pass the problem into another domain. Solving carbon problems can, for example, pass the problem on to other kinds of supply issues, rent-seeking behavior, arbitrage, etc. However, we can still do some of this with economic engineering (combinations of market and contract rules) if we use a kind of Pareto efficiency rule– start with the biggest problems first and work backward– permit the little inefficiencies to exist and simply engineer human solutions to the tough problems. When the problems of the world are explained thusly, then it becomes obvious that ethical solutions to market economic problems are certainly obtainable, and only ignorance or immoral behavior can explain why we don’t engineer problems of public goods of such nature. This means our real problem is NOT economic but political/social. Ironically, everyone keeps blaming economists when the real blame lies in the power structures of political reality.

AS a general rule, one would say that markets should only be the appropriate mechanism where externalities and supply side inter-dependencies are trivial. When they are major problems, markets will inevitably destroy whatever environment you are dealing with. They eat themselves. They are cancerous. However, if you can contain and isolate markets from the ecosystem so that they are in “remission” essentially, then they are optimal. Ecosystems do suffer from cancerous market-like problems, too. The main reason why ecosystems tend to survive in the long run is that the entire system adapts to starve the cancer. Human markets aren’t designed to adapt to starve the cancer efficiently. They will in the long run, but in the long run we’re all dead. A troublesome species like humans can simply write themselves out of existence. Well, if that’s not an acceptable endgame solution, then we have to constrain our own cancers before we eat ourselves. This is why we need social contracts, and if we cannot make adequate ones, we need to break into subspecies (tribes, etc.) and exterminate the cancerous subspecies that are indigenous to the problem in order to save the species. That sounds awful, but true.

Poor Richard: I agree with you about the difficulty of the math. Fortunately massive data collection and pattern detection may soon give us a new way of doing science, and replace a lot of difficult mathematical modeling. I think we should take about 10% of all scientists and mathematicians and put them on that critical path.

Robert Ryan: We are reaching a state of the world that definitely calls for a technocracy in the similar sense that Plato wanted us to have philosopher kings. Truly the smart people of this world could be put to work solving our problems in a fashion far superior than is currently being done, and this is a big part of my political platform I advance. I call it the Pragmatist party (or New Bull Moose).

Poor Richard: I like the sound of the Pragmatist party. How would it handle the 1%?

Robert Ryan: By appealing to the top 20% instead. One of the big fallacies is that the 1% can out-bully the entire middle class. They can’t. No middle class and there is no economy, no military, no institutions to exploit. The middle class has not really shrunk. Its the lower middle, or working class, that has been getting worse off and shrinking as more people are falling to the lower class. The real middle class is really the professionals, intellectuals, entrepreneurs, petite bourgeoisie. There is no political party designed to appeal to them directly. In fact, both American parties preserve power by going around them completely. Most of the real middle class are independent and non-extremists. The pragmatist party basically says: enough is enough. These are the real job creators, the innovators, the creatives of society. Without them there would be no economic growth. So, let’s appeal to them pragmatically and say they can deflate the 1%, and in exchange for gaining more representation, they must take better care of the lower classes than the 1% has. Our target audience is thus the people who truly dominate campaign donations, charity donations, and our communities, but have been so fractionalized and “suburbanized” so as to think of themselves as independent instead of a class. If they were to think of themselves as a class again of sane people of balanced reasoning, then the middle class could save us.

Poor Richard: How can you appeal to such a class without insulting or alienating the rest of the 99%? And isn’t there a good reason that the middle class doesn’t make waves?

Robert Ryan: Yeah– I’ve had this discussion many times before. Well, we are reaching a point where, for the first time in American history, their prospects are not looking to get better, and they all mostly know that their nation is crumbling slowly, and that there is no good reason for this to happen. There are already plenty of instances of these people getting together to get the job done on a smaller scale. Typically you see this in university/business/local govt. cooperation. Various entities have gotten together to plan to save Detroit, for example. And they’re already on the right track. These sorts of cooperative efforts to socially contract new, smarter solutions do happen, and when they do, they tend to be more localized. This is part of the sensibility of the authors out there writing about the urgent need to revitalize our cities– cities are the places where, historically, the top 20% collaborate to make great places to live for everyone. The 1% typically help finance everything and provide resources flowing into these cities. But the very history of the city is the history of the yeoman specialists and master tradespeople getting together and making economies tick. The role of the larger federal system is to provide resources to these self-organizing activities on a more local level– such as infrastructure banking, research grants, development money, etc…but the activities have to be more local and less centrally planned. There seems to be an optimal scale efficiency of central planning, and it is when you have diverse interests willing to throw their hat into a common state interest– in the US, this has never been the federal level because of a lack of common identity. Regions and states are more apropos. Richard Florida is one man who understands this and would be an ideal candidate for such a party.

Richard Florida | Creative Class Group

How Detroit Is Rising

You’ve heard the story of the city’s downfall. This is the story of its comeback.

Multimedia showcase | Creative Class Group

mimicking the balance between steady-state and development in living systems

Public Truth

No Fairness Doctrine

Image via Wikipedia

Fox News’ Lies Keep Them Out of Canada

By Robert F. Kennedy Jr., Reader Supported News, 01 March 11

s America’s middle class battles for its survival on the Wisconsin barricades – against various Koch Oil surrogates and the corporate toadies at Fox News – fans of enlightenment, democracy and justice can take comfort from a significant victory north of the Wisconsin border. Fox News will not be moving into Canada after all! The reason: Canadian regulators announced last week they would reject efforts by Canada’s right-wing Prime Minister, Stephen Harper, to repeal a law that forbids lying on broadcast news.

Canada’s Radio Act requires that “a licenser may not broadcast … any false or misleading news.” The provision has kept Fox News and right-wing talk radio out of Canada and helped make Canada a model for liberal democracy and freedom. As a result of that law, Canadians enjoy high quality news coverage, including the kind of foreign affairs and investigative journalism that flourished in this country before Ronald Reagan abolished the “Fairness Doctrine” in 1987.

Fairness Doctrine in the US

In the US, our commitment to free speech even extends to liars. None of us here want a “Truth Police”. That would be too “chilling” on our rights and liberties. The “Fairness Doctrine” ingeniously addressed the problem of biased (and lying) speech on the public airwaves not by limiting speech, but by adding more speech to it.

The Fairness Doctrine was a policy of the United States Federal Communications Commission (FCC), introduced in 1949, that required the holders of broadcast licenses to both present controversial issues of public importance and to do so in a manner that was, in the Commission’s view, honest, equitable and balanced. The 1949 Commission Report served as the foundation for the Fairness Doctrine since it had previously established two more forms of regulation onto broadcasters. These two duties were to provide adequate coverage to public issues and that coverage must be fair in reflecting opposing views.[1] The Fairness Doctrine should not be confused with the Equal Time rule. The Fairness Doctrine deals with discussion of controversial issues, while the Equal Time rule deals only with political candidates.

In 1969, the United States Supreme Court upheld the Commission’s general right to enforce the Fairness Doctrine where channels were limited, but the courts have not, in general, ruled that the FCC is obliged to do so.[2] In 1987, the FCC abolished the Fairness Doctrine, prompting some to urge its reintroduction through either Commission policy or Congressional legislation.[3] Following the 1969 Red Lion Broadcasting Co. v. Federal Communications Commission decision, which provided the Federal Communications Commission (FCC) with more regulatory power, the main agenda for this doctrine was to ensure that the viewers were exposed to a diversity of viewpoints.

n 1974, the Federal Communications Commission asserted that the United States Congress had delegated it the power to mandate a system of “access, either free or paid, for person or groups wishing to express a viewpoint on a controversial public issue…” but that it had not yet exercised that power because licensed broadcasters had “voluntarily” complied with the “spirit” of the doctrine. It warned that:

Should future experience indicate that the doctrine [of 'voluntary compliance'] is inadequate, either in its expectations or in its results, the Commission will have the opportunity—and the responsibility—for such further reassessment and action as would be mandated.[7]

The Fairness Doctrine has been strongly opposed by prominent conservatives and libertarians who view it as an attack on First Amendment rights and property rights. Editorials in The Wall Street Journal and The Washington Times have said that Democratic attempts to bring back the Fairness Doctrine have been made largely in response to conservative talk radio.[32][33]

On August 12, 2008, FCC Commissioner Robert M. McDowell stated that the reinstitution of the Fairness Doctrine could be intertwined with the debate over network neutrality (a proposal to classify network operators as common carriers required to admit all Internet services, applications and devices on equal terms), presenting a potential danger that net neutrality and Fairness Doctrine advocates could try to expand content controls to the Internet.[34] It could also include “government dictating content policy”.[35] The conservative Media Research Center‘s Culture & Media Institute argued that the three main points supporting the Fairness Doctrine — media scarcity, liberal viewpoints being censored at a corporate level, and public interest — are all myths.[36]

In June 2008, Barack Obama‘s press secretary wrote that Obama (then a Democratic U.S. Senator from Illinois and candidate for President):

Does not support reimposing the Fairness Doctrine on broadcasters … [and] considers this debate to be a distraction from the conversation we should be having about opening up the airwaves and modern communications to as many diverse viewpoints as possible. That is why Sen. Obama supports media-ownership caps, network neutrality, public broadcasting, as well as increasing minority ownership of broadcasting and print outlets.[38]

In February 2009, a White House spokesperson said that President Obama continues to oppose the revival of the Doctrine.[39]

(Wikipedia)

At the end of the day, the Fairness Doctrine only helped to provide more diversity. That’s not the same thing as truth. Its more like truthiness.

(By the way, it is very interesting to me that the conservative Media Research Center considers the public interest a “myth.” Conservatives tend to consider the concept incoherent or ambiguous, but I believe that says more about their own cognitive process than about the public interest.)

Broadcasters always hated the fairness doctrine for a variety of reasons, financial and ideological, but I am not sympathetic to the arguments against the doctrine based on property rights, since mass media (even cable) depends on public resources — spectrum and rights of way. But I am sympathetic to concerns about chilling free speech by placing burdens upon it–even the burdens of truth and decency.

On the other hand, I am deeply concerned about the power of mass media in our culture and its capture and use by the super-rich to promote their agenda and spew their propaganda. Our media is almost all privately owned –for sale to the highest bidder. Don’t huge media monopolies threaten our access to accurate information and undermine the democratic process itself?

We rightly prize our freedom of speech, but we also know the right to free speech comes with a responsibility. We all know about  the “power of the pen”, and we all know that power can cause harm. And not just hurt feelings, but financial and physical injury. That’s why we have laws against libel, slander, criminal defamation, and incitement to violence. That’s why, as every school child of my generation knew, we can’t falsely yell “fire” in a crowded theater.

Of course when it comes to our free press, we rightly bend over backwards to be permissive. The public interest in a free press is often greater than the interests of individuals or even groups that may be harmed by journalistic errors, irresponsibility, and even outright lies. But when lies and inaccuracies become pervasive, isn’t there is a compelling public interest in demanding a certain level of honesty and responsibility, even from the free press?

Yes. The only question in my mind is how to maximize that public interest without unintended consequences. We don’t want to throw the baby out with the bath water or shoot ourselves in the foot.

Truth, Justice, and the American Way

Superman fights for “truth, justice and the American way.”  (“In the 2006 film Superman Returns the phrase was recited by the character Perry White as “truth, justice, all that stuff.” ~Wikipedia)

So what would Superman do? What is the American way (or all that stuff)?

Truth

There are three ways to make truth and accuracy available in the media. They can (and should) be used in combination:

  1. Diversity. This is promoted by busting up or regulating monopolies. Then (using this method alone) it is “hands off” and hope for the best.
  2. Regulation. This is imposing penalties, as Canada has done, for lying or for causing harm. We regulate speech and visual content in the US to restrict sex and “foul” speech (the least justifiable intrusion of big government into free speech, brought to us by libertarians and republicans), but not lies. We can’t touch outright lies on media claiming to be news. The Fairness Doctrine was a relatively soft form of regulation, but it may have still been unnecessarily burdensome on private media. We need to explore new regulatory principles and methods (see “Justice”, below).
  3. Public media. By itself, this leaves “hands off” the private media, but offers robust public alternatives that have high standards, public oversight, and a firewall against partisan political influence.

Justice

We need methods for regulating private media in minimally invasive, burdensome, chilling ways to minimize the harm that media may do to individuals, to groups, and to civil society. What I propose is in a sense a method of private regulation. In general, I think we need to leave private media alone unless they do harm. Basically, I think we just need to make sure that media is fully accountable for civil torts as well as crimes. We need to insure that anyone unjustly harmed by media has legal standing to pursue a remedy. We need to see to it that there is an adequate statutory framework to address the most common types of injury; that there is enforcement; and that there is judicial due process. There needs to be a single point of entry to the justice system for citizens who claim to have suffered injury by the media. There needs to be public-appointed representation for citizens who can’t afford private counsel. But I think we need to go one step further and give all citizens the right to sue media for injuring the public welfare. Failing to serve the public well is not generally the same as injuring the public but in some cases it might rise to that level, especially where the public has contractual expectations of the media by virtue of spectrum, rights-of-way, tax breaks, etc..

Wherever government has authority to act, citizens should have that authority as well, at least by having standing to bring an administrative or judicial complaint or suit to force the government or court to act. But the scope of government regulatory authority should by no means be the limit of a citizen’s right to sue for an injury sustained. All tort principles also apply.

Will this open a floodgate of excessive litigation? Will big media bullies game the system or turn it against those it is intended to protect? Sure. This has been the problem with the law from day one. It has been the problem with democracy from day one. Democracy is the worst possible form of government except for all the others. What is the alternative? We have to strive to put big business and little people on an equal footing in the law, at every step in the process. Fair play is the American way, but it takes all of us, every day, in every way, to operate as a fair and just society. Legislators, courts, and regulators have always struggled with bias, manipulation, and corruption. Not surprisingly, much is known about how to minimize them. We know much more than we apply. None of this is anything new, and it is only peripheral to the proposals made here. It goes without saying.

Fair Play–the American Way

Bust up monopolies. Our people, from the woman in the street to most of the judges on the US Supreme Court, have generally opposed monopolies. Our country got its start largely due to popular opposition to a Brittish monoploy, the East India Company. Hatred of monopolies is in our DNA. But how can we have a free press if all the presses have been bought up by a few giant corporations, some of which are even based in foreign countries, just as the East India Company was? As we have had to do in many industries in the past, we must break up the giant media monopolies to protect the freedom of the press. This is just as true in the internet age as at any time in the past. The internet is the modern “press”. Though it was created by universities and public institutions, private monopolists are constantly encroaching on it, trying to capture its infrastructure and resources and turn it into a digital version of medieval feudalism. Modern monopolists talk “freedom” and “private property” but they want all the freedom and private property for themselves, not for us.

Public media, public access, public interest

Diversity and regulation are not going to fully satisfy the needs of the public interest.  We need a public media system that has parity with private media.

Perhaps the best example of public media thus far is the British Broadcasting Corporation (BBC), the largest broadcaster in the world, with about 23,000 staff. In the US we have the smaller, weaker Corporation for Public Broadcasting (CPB),  NPR, PBS, and their affiliated local stations. In the US, the public broadcasting system is dwarfed by private players and is under constant attack by conservatives and their corporate masters. The attacks are usually framed in ideological or fiscal terms, but their fundamental motives are political and commercial (anti-competitive). Often, public media are accused of being propaganda organs of the state. For Fox supporters to call PBS a propaganda organ is the height of hypocrisy and irony.

A  fair, open, transparent, and accurate media is a prerequisite for a fair, open, and transparent society. Democracy cannot just leave all of its media needs to private, independent (undemocratic) operators and “hope for the best”. We can’t let the Foxes run the hen house if we want to keep getting any eggs.

For the fiscal year 2010, the budget of the US Department of Defense, including spending on “overseas contingency operations” was $663.8 billion.

CPB’s annual budget for fiscal year 2010 was $422 million. Of course that doesn’t count all those funds donated “by members like you” who must listen to sickening corporate promos, tag lines, and seemingly endless on-air fund-raising marathons.

I propose that a new US Public Media Corporation be funded at parity either with the military budget or with the largest private media conglomerate, whichever is greater. I am convinced that our public access to self-education resources, reliable information, and social networking and collaboration infrastructure is as important to the maintenance and security of our democracy as the military.

The funding for such a corporation should come entirely from the public treasury (no more commercials, corporate promos, or fund-raising marathons) and should be totally isolated from private, commercial, or political special interests.

I suspect that those organizing this corporation could learn a lot from the US Postal Service.

One of the first orders of business would be the provision of broadband and 4G mobile network service to every location and person in the nation. If necessary, some exiting infrastructure should be nationalized by eminent domain. The rates charged for these services would be computed on a break-even basis the way that the Postal Service computes it postage prices.

Wherever technically feasible, the organization and infrastructure built by this public media corporation should be decentralized, local, democratic and peer-to-peer. The network should be modular/cellular, massively redundant, and self-healing. There should be few if any central points of failure. This is not about command and control but about serving the public interest in all the ways the marketplace has failed to do so.

The public media corporation should address all media modalities: broadcast, satellite, mobile, and fiber; networks, platforms, applications, and tools; and last but not least, content.

The “trunk” of the public media system would be a National Public Internet (NPI). (See the related article at the end of this post)

I also think it is time for a National Public Wikipedia that would aggregate many wiki domains including the legacy Wikipedia and forks like Citizendium. This public metawiki would not intervene in legacy wiki editorial and political issues but would establish a universal presentation, user interface, and meta-data standard so it could serve as a two-way portal (editing and presentation) and a single point of access to all participating wikis. This National Public Wikipedia could also have a layer that aggregates and standardizes all the reputation/quality/confidence metrics. In conjunction with this, the same organization could also host a National Public Search Engine and a National Public Social Networking platform based on transparent open source software. Further, the same organization could maintain a distribution of Linux that would include a p2p cloud server node on which all these National Public Internet services could run in distributed fashion.

The private marketplace has had long enough to get its act together and deliver the networks, platforms, and content we want and need. It has failed miserably in comparison with what has been wanted and what has been technically feasible.  The free market is great for some stuff, but it is no panacea, and if we don’t ALL see that by now its probably because we have been dumbed down  by the private mass media–or because we are corrupt, self-serving liars with massive conflicts of interest between our personal greed and the public good.

Of course, in a national public media corporation, there is no constitutional protection for Lies and the Lying Liars Who Tell Them. A lying liar (such as a Rush Limbaugh) could be fired at the drop of a hat. Its a  so-called “morals clause”. The same is also true for any private media corporation (such as a FOX*), and it has been all along.

That is the public truth.

Poor Richard

* FOX = Fraud, Oligarchy, Xenophobia

PS While we’re at it lets start a US Department of Market Failures. It can receive online petitions for goods and services that are not available (for no good reason) in the “free market”, such as a notebook PC with pre-installed Linux, a lawn sweeper with metal (not plastic) gears and wheels, a pull-behind friction-powered sickle mower, a rammed-earth brick machine, photovoltaic window film and roof tiles, and so on. Then it can contract for these goods and services from small and minority-owned businesses and operate an online store for their sale and distribution.

Related Articles

Bill St. Arnaud: Marriage of Facebook & Telcos – and why we need a National Public Internet (NPI)

big, fat, lying liars like Limpbaugh and FOX*
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