Of pizza and the privatisation of public policy

Pizza has been declared a vegetable.

The United States Department of Agriculture's (USDA) proposed food standards were undermined by a congressional spending bill that enabled pizza to be counted as a vegetable. The bill was the result of lobbying by the frozen food industry to ensure that pizza and chips would still be available for school lunches.

In addition the bill will:

• Block the Agriculture Department from limiting starchy vegetables, including corn and peas, to two servings a week. The rule was intended to cut down on french fries, which many schools serve daily.
• Allow USDA to count two tablespoons of tomato paste as a vegetable - which allows pizza to be counted as a serve of vegetables. Federally subsidized lunches must have a certain number of vegetables to be served.

The intervention and lobbying by the fast-food industry to undermine the science-based public policy making of the USDA is yet another example of the increasing trend to privatise public policy making.

Interest groups and lobbyists have disproportionate sway over lawmaking, and in some cases have been able to  get lawmakers to completely abrogate their responsibility to legislate in areas of public policy. So much so that areas that were once the purview of government are now almost purely regulated and enforced by private interests.

This is particularly the case in intellectual property (IP) policy, where industry lobby groups have monopolised the public debate so that they virtually write the legislation for lawmakers to pass.

The recent "Stop Online Piracy" (SOPA) bill is one such example. The bill, if made into law, would give content publishers unprecedented powers to censor and control the publication of online content - making the content  publishers ultimate arbiters of what can be published on the internet. Through laws such as these, Governments have bestowed arbitrary quasi-judicial powers upon powerful interests, removing requirements for due process, natural justice or evidentiary rules - thus shirking their responsibilities to legislate public policy or protect the public interest.

The powers that the bill confers have been likened to the powers that the Chinese government executes over internet content through the "Great Firewall" albeit that the Western version is executed by private, rather than government interests. However, like the Chinese Firewall, the public can not dismantle this policy by excercising their democratic powers - the interests of this private plutocracy are just as dictatorial and totalitatarian as the Chinese Government.

In Australia too, the government has abrogated its responsibility to the public on IP policy by signing up to secretly negotiated "free-trade" treaties such as the Trans-pacific partnership.  The government is also refusing to take a leadership role in regulating IP infringement on the internet - preferring to hand that process over to vested interests in the ISP and content publishing industries rather than legislating in such a way that provides a balance between industry interests and the public interest.

The pervasiveness of the ideology that advocates that public policy is best executed by private interests relegates lawmaking to mere administration and democratic power to tinkering around the edges of issues. 

This abrogation of public policy making by lawmakers has not only had a chilling effect on the rights and freedoms of people, but it has also had serious effects on the world economy (global financial crisis), environment (climate change) and public health and wellbeing (health policy). However, lawmakers are satisfied to leave these important issues up to private interests instead of providing political leadership in the public interest and when a government does try to allow its citizenry to have a say, it is loudly shouted down and decried by those powerful interests to which an appeal to democracy would disadvantage the most.

Various governments have handed over some of the most important areas of public policy to powerful private interests to varying degrees. The economy, the environment, public health and culture have all been privatised to varying extents.

The virtual privatisation of these areas of public policy has collectively given society the global financial crisis by handing the economy to bankers, global warming by acquiescing to industrialist interests, a global obesity epidemic by pandering to the fast-food industry, lack of access to drugs in developing countries by granting broad patents to pharmaceutical companies and limitations on free speech and  human creativity by the over-regulation of IP.

And as we complain about our politicians tinkering around the edges of what was democracy, at least we can drown ourselves in the vacuity of culture that is left to us by the plutocrats and reach for another slice of pizza.

Well, at least it's a vegetable.

The paradox of neoconservative incentive

It has always been a feature of neoconservative economic theory that if a person has a large amount of wealth, then they should be encouraged to accumulate more wealth with generous incentives. These incentives have taken the form of tax cuts, subsidies and deregulation. However, at the other end of the scale the incentives are of more a punitive nature, such as income quarantining, welfare cuts, faux-employment (such as work for the dole) and other coercive measures.

There is an economic theory that describes this seemingly paradoxical position. However, it has become so distorted by the entrenched interests of those that use it to reflect their interests and beliefs - that the wealthy should be rewarded with more incentives from taxpayers, whereas the poor should be punished - that it has become unrecognisable as the original "marginal productivity theory". At its heart, this theory relies on the fact that it is inefficient for a company to pay more wages to an employee than they would produce in profits - which is true. However, the application of this theory tends to be distilled to "people who get paid more are more productive and therefore of greater utility to society" which may also be true up until a point. That point however gets lost when the class of those that are paid at the highest rates are also those who set those rates. It is then that the theory becomes distorted beyond its somewhat reasonable premise.

This is what we see when we examine the sort of executive salaries and bonuses that are handed out at the top levels. It is hard to see how these wages and bonuses are efficient, especially when companies perform worse under the stewardship of an ever more highly paid CEO. In fact, some of the highest paid CEOs in the world were responsible for the recent financial crisis which one would think was hardly an efficient allocation of the company's funds. That is probably why they cynically altered the name from "performance bonus" to "retention payments". However, these captains of industry still have the government conned arguing that any possibility of paying a reasonable share via tax will "send jobs offshore" or "destroy the productivity of the industry". They continue lobbying for even more subsidies, tax cuts and deregulation - arguing that the payment of these monies will spur further productivity which usually translates into a higher executive pay at the top and job cuts down the bottom - remember the marginal productivity theory?

At the other end of the scale we have the punitive measures that are bought to bear on the unemployed. The neoconservative theory goes something like this: "The unemployed are not productive; therefore it is inefficient to pay them". However, this makes the assumption that the unemployed are not made more productive (in the sense that they are more motivated to find work) by giving them money and the only way to give them more incentive is to remove it from them. This only works if the only reason why people are receiving unemployment benefit is for the money which, considering the paltry amount provided by the dole, is not as prevalent as "Today Tonight" and "A Current Affair" would have us believe. However, our very own neoconservative opposition leader is pandering to precisely those views. In a grab-bag of "bludger" bashing he has suggested punitive measures such as: income quarantining, forced re-location and the provision of labour at below minimum-wage cost (work for the dole). None  of these measures have been proven effective at lowering unemployment. However, they are effective at pandering to the ACA and TT crowds and to those that believe that it is inefficient to provide resources to the unemployed.

It is difficult to see how removing the unemployed from the usual workings of the economy by controlling their spending, removing them from their family support networks by forcing them to move to areas of higher employment or making them work at menial tasks at less than minimum wage will encourage them to find work. It is far more likely to marginalise them further.

However, this is a paradox that the neocons feel comfortable with because of this distorted perception of the efficient allocation of resources. When those perceptions are built from the perspective that only those that have access to wealth and resources should have access to further wealth and resources courtesy of the state because it is efficient merely because they have access to those resources. Not only does this allocation at the very top of the economy have no connection to productivity but it also feeds the distorted belief that the allocation of resources to those that have few resources is inefficient merely because they have few resources. Of course, the fact that this view has lead to a distortion of wealth distribution and a severe financial crisis does not seem to register with them, probably because it is in their interests to ignore it.

The new gatekeepers- internet freedom has a price but no way to pay

Much has been made of the internet being the great 'leveler'. Citizen journalists and bloggers have challenged the model of traditional publishing, file-sharing has challenged the business models of the music and movie industry (and here, I mean not just file-sharing that infringes copyright but file-sharing as a distribution mechanism) and open source software has challenged the models of software development and distribution. Each of these mechanisms have removed, to some extent, the gatekeepers of content production and distribution, allowing an expansion of the sharing of ideas, content and culture. In the post-wikileaks world, the removal of the traditional gatekeepers of media and government has thrown the spotlight on government practices and the ability of the internet to spread information, culture and ideas has led to significant pressures being placed upon government (including, some would argue, the fall of several governments).

The reaction of government has predictably been to attempt to crack down on the internet through both censorship laws and the expansion of laws that further empower the private sector to move against the leveling influence of the internet (such as expanded copyright laws and domain seizure laws). In this case, at least citizens have the nominal right to reject these laws by excercising their rights at the ballot-box (and yes, practically this  is more difficult due to entrenched interests and money politics, but that's a rant for another day) and rejecting the government's intrusions.

However, more worryingly, a new danger to internet freedom has raised its ugly head and begun to exert its influence.  Another set of gatekeepers, ones that have not yet succumbed to the leveling influence of the internet, have begun to flex their muscle as gatekeepers of content and information and as these are private entities citizens have no way to counter their power.

I am referring to the financial gatekeepers of the internet. The duopoly of Visa and Mastercard (along with PayPal to a lesser extent) have begun to exert their power over the financial flows to entities and websites that they deem to be undesirable - and governments, recognising this power, have sought to use these gateways to censor and undermine websites and entities that threaten their power.

The most obvious recent case is that of PayPal, MasterCard and Visa halting payments to Wikileaks under the spurious auspice of 'violating their terms and conditions', something which the KKK or NAMBLA somehow don't do. It is quite obvious why the payments were halted - 'pressure' from the US government. There was no actual legal power upon which the government could rely, so they turned to the gatekeepers to block finances and attempt to hamstring Wikileaks. It was a frightening display of State power combined with the power of the gatekeepers brought to bear on an organisation which, to date, has not been shown to break any laws.

The UK government has also discovered that using the gatekeepers is easier than having  to pass legislation - since legislation has to go through that pesky transparency process known as parliamentary scrutiny.

In this case, the content industries, through their industry group IFPI, have bypassed the legislative step entirely and gone straight to enforcement - using  the police to protect their private interests through the police's "economic crime directive" which is ostensibly to combat fraud rather than copyright infringement. Basically, the police verify that the site appears to offer unlicensed copyrighted material and hand the details to Visa and MasterCard to effectively cut of the finances of these sites. There is no recourse, no appeal and no judicial oversight. Whether the accused have violated Visa or MasterCard's 'terms and conditions' is a matter for Visa and MasterCard and not for the courts.

It is not difficult to see this model being extended to other types of activities that either governments or big business find undesirable - they've already done it to Wikileaks. It is in a way similar to the corporate strategic lawsuit against public participation (SLAPP) suit - a legal threat to close down criticism - but at least with a SLAPP suit there is a way to fight it in court. A financial SLAPP from Visa and MasterCard is almost impossible to defeat - it is their terms and conditions and as private entity they can choose who to do business with, or not.

The dominance of these financial gatekeepers represents a dangerous bottleneck to internet freedom. Although we still may be able to publish and distribute information - the ability to finance this distribution also forms an important part of this freedom.

It is often said that "freedom has a price", the problem is that it may become increasingly difficult to find a place to pay.