Vi@gr@ $old h^r^: Is your annoyance our problem?

By the end of the year, the number of emails sent worldwide is predicted to reach 136 billion per day. An estimated 64 per cent of these, however, are spam — unsolicited emails sent in bulk, usually of a commercial nature.

The question is how to deal with the spam — should it be left to internet entrepreneurs and innovators, or to government regulators?

Spam is popularly derided for a myriad of reasons.

Like most technological develop-ments in communication, spam marketing has been pioneered by the porn industry. Most people with email addresses will now be intimately familiar with the benefits that Viagra has on ‘performance’, often graphically illustrated.

Spam is said to have a negative impact on productivity. A survey in the US, the 2004 National Technology Readiness Survey, found that workers spend 2.8 minutes per day deleting spam, at a total cost to US businesses of $21.58 billion annually in lost productivity. While the survey’s results, which relied on self-reporting, implied that workers spent more than 9 seconds deleting each spam message they received, the findings reflected a broad social belief that spam does not merely annoy, it harms.

As well as being detrimental to productivity and offensive, spam has also become a tool of the fraudster — Nigerian royalty are looking for investment partners right now. Spam is not restricted to email – spambots (automated robots which crawl the Internet looking for places to put spam, in part to raise their Google rankings) are now a common curse of the comments section on blogs, and a burden on website administration.

In response, governments around the world have stepped in to try to curb the evil of spam. The US CAN-SPAM Act 2003 requires email solicitations to provide details such as opt-out information, warnings about adult content, and a valid physical address of the business.

The Australian Spam Act 2003 goes much further — making it illegal to send ‘unsolicited commercial electronic messages’ that have an Australian link, with the usual exemptions for charities, political parties, and the government. The penalty for doing so can be as high as $1.1 million a day.

Despite the well-publicised efforts outlined above, spam continues to grow in quantity. While the Australian Government may be able to punish businesses with Australian links or physical addresses, there is absolutely nothing they can do to punish Russian — or Nigerian — spammers. While the legislation stops at the border, in a networked world, the spam does not.

Given that the problem is worldwide, it was perhaps inevitable that the United Nations would come to consider spam as a matter of utmost importance. Combating spam has become a central plank in the UN’s push to take over regulation of the internet.

None of these legislative remedies work. In fact, spammers don’t tend to obey laws. No legislation, no matter how draconian or restrictive, would be able to stop spam.

As one of the founders of the internet’s architecture, Vince Cerf, says, ‘if all you have is a hammer, everything looks like a nail. If we are not careful, we may fall into that trap by trying to develop overly simple definitions for what is really a very complex question’.

It is much wiser to leave anti-spam measures to the private sector, to place the responsibility for removing spam from mailboxes on the owners of those mailboxes, rather than a Canberra-based spam taskforce. nti-spam technology is one which the private sector is well equipped to develop. Sensible protection measures on individual machines, as well as responsible handling of spam messages (never respond to spam) reduce vulnerability. Email filters, available at all levels of ISP-user interaction, are able to reduce spam by a variety of methods — searching for commonly used spam words, statistical analysis, authentication, checksum-based filtering, and a whole host of others.

The back and forth between spammers and anti-spam developers has forced spammers to innovate and produce what will likely be remembered as a cultural artefact of the period—replacing ‘viagra’ with ‘|/@g^ra’.

There are clear indications that the anti-spammers are winning. Google’s web-based mail service, Gmail, has a spam filter which is remarkable in its capacity to identify dodgy messages accurately. Existing filters are highly effective in screening for malicious attachments — the only real danger that spam poses.

Do-not-call or do not answer?

Governments’ efforts to protect us from spam are indicative of an approach to modern communications which is expensive, symbolic and useless. Rather than allowing communications technologies to develop at the pace at which the market dictates, governments are intervening whenever it sees a ‘threat’ — even if it is undefined and merely an annoyance.

Does the mere fact that people are annoyed require government action? Is it the government’s role to encourage the productivity of individual workers? These seem to be the rationale behind the Spam Act, and the rationales behind the increasing amount of anti-annoyance legislation.

The Do-Not-Call list is another example. Modelled on the US system, the proposed Australian Do-Not-Call list is an opt-in list for those who do not wish to receive commercial telemarketing on their home phone. On the grounds that unsolicited commercial phone calls are intrusive, the do-not-call list would fine companies who called people who had registered. Similar exemptions apply here as with spam: charities, political parties and research institutions — as if these groups do not make intrusive calls seeking money!

With no apparent irony, the Consumer’s Telecommunications Network’s executive director, Teresa Corbin, stated in October that tele-marketing ‘is a huge issue for consumers. It should be dealt with the way spam has been dealt with — effectively and by the Government’.

Although Corbin draws the parallel for the wrong reason, spam and telemarketing are clearly similar — and have similar, free-market solutions.

Individuals are free to hang up the phone, and even to disconnect it when they do not wish to be disturbed. For those who don’t want to miss important calls, using answering machines to screen calls is not exactly a new development. And the market has come up with numerous other technological solutions — various products are available on the market that can screen telemarketers’ calls specifically, detecting the telltale signs of a call centre autodialer and hanging up the call.

Malicious content: spyware and zombies

While telemarketers and (in most cases) spam emails are not malicious, some unsolicited communications material can be. Spyware, roughly understood, is software that installs itself on your computer without your knowledge, desire or approval. Not only can it render the machine unusable if it is allowed to build up, but it can also report private information on it to another party. The challenge of making even a working definition of ‘spyware’ illustrates the haphazard approach any legislative solution to the problem would present.

As the danger of spyware is greater, so is the response from the software community. The anti-spyware market is highly competitive — AdAware and Spybot Search & Destroy, two programs which are considered essential to keep a Windows computer clean, have been joined by a Microsoft anti-spyware system.

Any legislation to tackle spyware would have little effect on the major sources of the problem — the software markets operating out of Russia and Asia which constitute the bulk of nefarious activity. As Andrew Grossman of the Heritage Foundation says, ‘no set of regulations, no matter how finely detailed, would have much of an effect’.

The Australian Communications and Media Authority has recently announced its intention to intervene when computers have been hijacked by spyware or other users and are broadcasting unintentionally over the Internet — a phenomenon known as ‘zombies’. A worthy cause, but again, one in which government’s involvement is unnecessary and ill-advised.

Responsibility for the Internet and the computers connected to it has to remain with those who have a stake in them — that is, users and internet service providers. If, as it seems clear, the government cannot keep up
with the pace of innovation in spam, spyware, and telemarketing, then its input is at best unnecessary and, at worst, counter-productive. A government insisting that it is tackling the problem of spyware would rob users of an understanding that they have to protect their machines themselves.

Depending on who you listen to, the first act of spam occurred either in 1978 or in 1994. The first Spam Act was passed in 2003. The decade-long lag between the invention of spam and the legislation to protect against it
is a perfect illustration of the futility of government action in protecting people against the horrors of the internet.

ACCC Paying Lip-Service To Innovation

Australian Competition and Consumer Commission chairman Graeme Samuel now argues that content is the determining factor in whether a media company is being anti-competitive. (“Consumers the key to media revolution”, AFR, November 18).

Samuel says that the bar for monopoly has been substantially lowered. Now all it takes is an assessment that a company is acquiring too much premium content – sporting content, obviously, but movies as well. This judgement will continue to change as tastes do. He mentions tennis, AFL, rugby and cricket, but not soccer, which is now about as premium as you can get.

But it is the capacity for companies to make exclusive content deals that encourages entry into new, developing markets. If the ACCC punishes companies that it deems too enthusiastic in offering value to consumers, it will only make these consumers think twice about adopting the new technologies at all.

Why would the ACCC warn companies off experimenting with new products and services? Samuel may think that he is protecting competition, but by arbitrarily punishing companies he is punishing consumers and stifling innovation.

Such arguments as this betray the fact that the ACCC is merely paying lip-service to the possibilities of new media, rather than understanding its revolutionary consequences.

Can we remove the ban on mobiles in planes without killing each other?

Police in Warwick, Rhode Island, earlier this year reported that a driver, fed up with being stuck behind another driver who was chatting away on his mobile phone, got out of his car, called the other driver a punk, and promptly punched him in the face.

It’s now undeniably a cliché to proclaim that you can’t stand people using their mobile phones on public transport, or, for that matter, in any public place previously reserved for awkward silence. Mobile phones have inherited the same social baggage that smoking once held — perfectly legal and many people do it, but accompanied with disapproving looks from passers-by. As with smoking, it is greeted with the heavy-handed social regulation and legislation which is increasingly definitive of our relationships with government and each other. Bans on mobile phone use in cars are the most obvious example — the assumption being that making a phone call while driving is more dangerous than Mr Bean getting dressed on the way to work.

Is communication anti-social?

This is how most people approach the vexed question of mobile phone use on aircraft. It is easy to bristle at the possibility of having to sit through a nine-hour flight listening to a one-sided conversation in what seems to be Portuguese. For that matter, any electronic device can be potentially maddening — in the rare moments I take my iPod buds out of my ears, I’m sometimes shocked at how loudly I was listening to the music, and wonder how audible it was to people around me.

But there is a clear demand to use these devices. The flight between Melbourne and Sydney would be a decidedly different experience if the regular commuters were permitted to continue their business, rather than having that 51-minute quiet time. And as flying entails the diminution of a number of personal freedoms — food, sleep, even bathroom breaks are regulated — being able to communicate with family, friends or colleagues would be a reassertion of personal liberty.

And why shouldn’t they be allowed to?

Just as there are more dangerous activities to do while driving, there are more annoying things on airplane travel than a fellow traveller phoning home. If you don’t believe this, then you can’t remember John Candy in Trains, Planes and Automobiles, or Brad Pitt explaining to a bemused Edward Norton how to turn soap into explosives in Fight Club. But the quickest way to put the lie to the argument that mobile phones cause ‘air-rage’ (road-rage for the jet-lagged class), and should therefore be banned, is the mere existence of the expensive, back-of-seat telephones.

A recent survey of 702 air travellers showed that 63 per cent of flyers wanted to keep existing mobile phone restrictions on aircraft; only 23 per cent wanted to lift the ban. But as economist Bryan Caplan notes,

current opinion probably suffers from a large status quo bias. It wouldn’t take long before people started to enjoy the freedom to use their phones, and quit fretting so much about other people using theirs.

Would planes fall out of the sky?

Contrary to the impression created by the regular and hyperbolic instructions to turn off anything more powerful than a clockwork Happy Meal toy, it is not clear that electronic devices and mobile phones do interfere with aircraft electronics.

The history of regulation of personal electronic devices (PEDs) on aircraft, whether 2-way (‘intentional transmitters’) such as mobile phones, pagers and radios, or ‘non-intentional’ such as iPods, laptops and Game-Boys, has been one of apprehension. The initial ban on electronic devices on aircraft came after a 1963 study by the American Radio Technical Commission for Aeronautics (RTCA), which looked at reports that PEDs had possibly interfered with aircrafts’ onboard electronic equipment. Further studies by the RTCA, one in the mid-1980s, and another ten years later, found that such a risk was extremely low, but was highest at critical phases during the flight, particularly take-off and landing.

In addition to these three studies, the British Civil Aviation Authority (CAA) looked specifically at mobile phone devices which showed that, theoretically, they could interfere with avionics, in particular with systems which had been certified to pre-1984 standards. Following these findings, the CAA recommended that the ban be upheld.

NASA keeps a record of nearly 70,000 anonymously reported aviation incidents and flight problems. But in only 52 of these — in other words, 0.08 per cent — did the crew suspect that the interference was caused by any personal electronic device. (As a side-note, 23 cases of ‘air rage’ were listed as caused by the use of PEDs.)

Looking at a number of examples contained in the NASA Aviation Safety Reporting Systems database is instructive.

  • In May of 1995, the electric compass indicators of the first officer of a Boeing 737 gave erratic readings. After a sweep of the cabin was made for portable electronic devices, which resulted in flight attendants asking a passenger to turn off a compact disc player, the first officer’s instruments returned to normal working order.
  • In March of 1997, a Cessna 340/A pilot experienced erroneous readings when attempting to determine his location because of a passenger using a cellular phone. After the passenger turned off the phone, the pilot was able to locate his position and continue on with no problems.

But, as a 2000 US Congressional Hearing made clear, ‘neither the RTCA nor the CAA were able to duplicate under controlled conditions the interference from a PED that their studies indicate[d] could theoretically occur’. As shown above, the only examples of interference have been anecdotal — no firm link has been established between PED use and disruption to avionic systems. No incident has been able to be replicated. In one case, Boeing, struggling with the PED question, purchased a passenger’s laptop that a pilot claimed had triggered an autopilot error. Flying the same route, with the same laptop in the same seat, Boeing was unable to duplicate the incident.

In the absence of any corroborating examples, it is highly possible that in many of the 52 cases in the NASA database, the existence of a PED onboard was used as a convenient explanation for an otherwise undiagnosed incident. And how likely is it that only 52 illicit PEDs have been used on aircraft since the NASA reporting system began?

Regardless of the uncertain effects of PEDs on avionics, aviation regulators around the world have resolutely banned mobile telephones on aircraft, and placed heavy restrictions on nonintentional transmitters. These regulations are backed up by airline-specific rules about what can be used when.

But as well as being illustrative of the natural timidity of government regulators on safety issues, these regulations help airlines restrict any onboard communications to the expensive back-of-seat phones. If the regulation were lifted — the lack of replicable evidence suggests it could be — airlines may well err on the side of caution and retain their restrictions. But if one airline then decided that the safety regulations had been historically over-cautious, it could offer its customers the comfort of their own personal communications devices.

The decision about what PEDs to allow in the cabin could be firmly left in the care of the markets — there is no firm reason to require extra government regulation.

Airlines have recognized that communication can be a selling point. Late last year, progress was made by the FCC towards allocating spectrum for wireless broadband in aircraft. Lufthansa has already started offering unlimited Internet access on international flights for just under US$30. All that is needed is a laptop with a standard wireless card common to newly purchased machines.

Debate over the validity of regulations restricting PED use in aircraft have to face these developments. There is a growing demand for communications in the air, and with the upsurge in voice-over-IP services (even Google is getting into the market) wireless broadband will allow passengers to make calls online.

Not only this, but it is also likely that within the next twelve to eighteen months combination mobile phones, which use both the traditional GSM or CDMA network and the wi-fi 802.11 standard will come on the market. Will a wi-fi enabled mobile phone be used on aircraft while the regulations stand (assuming that the GSM or CDMA connection can be disabled)?

If wi-fi voice communication is allowed, be it on a laptop or off a standalone phone, the argument that mobile phones cause unnecessary ‘air-rage’ will be irrelevant. As is the norm in the communications and technology field, innovation threatens the already fragile justification for government regulation of personal electronic devices.

Dancing on the grave of employment

A Review of Independence and the Death of Employment By Ken Phillips. (Voltan, 2005, 207 pages)

William is a 24-year-old shearer from Queensland.

I’ve worked on shearing teams which are staunch in their observance of the [industrial] Award. They have the 3 minute bell which is a warning to all the shearers that the end of the run will happen in 3 minutes and they have to finish up their last sheep … They do not do any weekend work or extra hours during the week or any hours outside the exact allocated hours in the Award …

However, this is too restricted for me. I would rather have the choice whether I wanted to work weekends. I believe it is up to the individual … I believe that if I want to work weekends then that should be okay.

This attitude is repeated in dozens of industries all around the country. Independent contractor status is, as Ken Phillips’s new book Independence and the Death of Employment makes clear, increasingly seen as a more flexible alternative to traditional, heavily regulated employment structures.

And independent contracting status, while the most obvious manifestation of this new attitude to work, is by no means the only one. Phillips notes the existence of ‘independent employees’ — workers who work in firms, and are nominally under the command-and-control contract and structures of employment, but in their ‘actions, desires, thoughts and ambitions’ are independent none the less. These workers can be a firm’s greatest asset but also its greatest weakness: endlessly creative and innovative if the incentives are right, but resistant and often resentful at having their actions controlled.

Phillips’s book is a comprehensive, paradigm-shifting overview of these and a countless range of other issues, essentially trying to answer the basic question, ‘what is employment?’

Most economists tend to think of employment as a work-for-pay relationship. But Phillips suggests that this is incorrect. He alleges that employment is a relationship of legal and behavioural control — precisely the argument that the labour Left have been pounding away at for centuries. The evolution of legal precedent and the formalization of industrial relations in dedicated bodies has rigidly defined employment in this way.

Employment law distorts many of the objectives of work regulation. In the context of the law, employees are considered witless and lacking in control. The employer is supposed to be responsible for their witless employees. Independence and the Death of Employment controversially argues that employment degrades human beings and removes responsibility.

Employers take the blame for employees’ actions – discrimination or for breaking work safety instructions. But this is merely the framework with which the legal system approaches employment. Phillips’s argument is that the experience of employment is quite the opposite. Independent contractors and the phenomenon of ‘independent employees’ belie the fact that a job is more than mere servitude.

Career desires, power urges, ego trips and personal self-interest are the dominant motivations in the firm. Individuals in the firm will be ambivalent toward the firm’s making losses if the individual is unaffected.

Economists have long recognized this as an agency problem—managers, for example, don’t always operate in the interests of shareholders. But the solution is not more highly regulated employees but allowing greater independence, which workers are already striving for, to create the appropriate incentives for mutual benefit. And the legal framework and regulatory impulses of government which surround employment must catch up.

These are changes that are being made already — sometimes against great resistance. The Queensland shearers’ desire to practise as independent contractors formed the backdrop to an eighteen-month legal case between the Australian Workers Union and the State of Queensland.

Independence and the Death of Employment is a combination of manifesto, self-help book, and rigorous analysis. It represents a massive shift in thought on labour regulation and employment, and will be heavily scrutinized and criticized by analysts from across the political spectrum. But whatever change it represents in intellectual thought, it is dwarfed by the massive change in how Australians work today.

IPA Review Editorial, September 2005

The Babylonian Code of Hammurabi was not merely a list of laws and their applicable punishments; it also dictated a wide variety of labour market regulations and price controls.

‘If a man hire a field-labourer, he shall give him eight gur of corn per annum’. Herdsmen were less valued, only receiving six gur of corn per annum. To hire a 60-ton boat for a day, a ‘sixth part of a shekel of silver’. These measures so weakened the Babylonian economy that they helped bring down the empire.

Forty Centuries of Wage and Price Controls by Robert Schuettinger and Eamon Butler was published in 1979 by the Heritage Foundation, in part to illustrate the folly of the policies that were being enacted in the political and economic turmoil of the Nixon–Carter years.

Perhaps this is too harsh on Hammurabi. After all, he does look a touch like Father Christmas. And it is hard to blame the ancient world for not possessing the wisdom of Adam Smith, although Nixon and Carter should have. Hammurabi instituted his political economy in an era when there were no political economists — governing the first civilization was governing in a world bereft of theoretical and ideological justifications for policy.

By comparison, the twenty-first century is rich with both political theories, and historical examples to hang them by. There are a raft of scholarly justifications for any policy preference, no matter how clearly devoid of logic. For a good illustration of this, Mike Nahan’s investigation of public service spending under the Carr Government (p7) shows the folly of governments adopting radical academic theories. (This IPA Review revives the ‘Around the States’ series, which will look at the issues facing the States, five years after the introduction of the GST.)

Even thousands of years after it was clear that the economic controls detailed in the Code of Hammurabi were self-destructive, governments practise the same flawed policies around the world. In this issue of the IPA Review, Erik Gartzke looks at the often-repeated claims of ‘democratic peace’, and finds them wanting (p12). He concludes that, instead, economic freedom is correlated much more closely with peace. This makes sense. Economic freedom, with its immeasurable benefits for the work and leisure of citizens, eases political pressure on governments — pressure which so often manifests itself as internal or external violence.

Looking at Africa in this context is instructive. In the pre-colonial era, free trade and free enterprise flourished — price and wage controls had no place in the continent – wide trade routes that characterised inter-tribal relations. Socialism and government regulation don’t exist in the African tradition. But nonetheless the continent has been cursed for more than a century with archaic price and wage controls. ‘Trade not aid’ is a slogan often bandied about, but it is clear that economic freedom — policies enacted in the countries themselves—is the only solution to the African ‘problem’. The path to economic freedom is rocky. Thankfully, as Nicholas McGowen details in this issue, there is an optimistic case for Africa.

This December issue is full of provocative articles. Looking at the recent revival of Bill of Rights advocacy, Rohan D’Souza asks whether more laws make more freedom. David Tribe takes a long view of biotechnology in agriculture—taking the great transition slowly just isn’t an option, let alone trying to reverse it, as much government policy seems to desire. Alan Moran reminds us why football is an interna-tional game, and the AFL is stuck in Australia. Federalism continues to be a focus, as Gerard Boyce examines the distorted and dangerous workplace safety regimes around the country. And Daniel Mandel uncovers what Trafalgar means to the Anglosphere today.

I hope you enjoy the issue, and your holidays.

Myths of the Corporate Media

Conventional wisdom places the print and broadcast media on a knife’s edge between two mutually exclusive requirements — the requirement to provide citizens with a challenging, informative and independent media, versus a desire to express the interests of ‘big business’ and make a profit. We are continuously told that both the broadcasting and the print media are increasingly driven by the profit motive. Independence, quality and diversity versus business interests — like Kipling’s East and West, never the twain shall meet. We are told that the media is irrevocably biased against ‘progressive voices’. Our very own Australian media mogul, Rupert Murdoch, is more dangerous to civil democracy than Citizen Kane ever could be. His Fox News is not merely biased, but actively partisan. (The far-left moveon.org proclaims ‘The Communists had Pravda. The Republicans have Fox’.)

Around the world, much of this is blamed on media deregulation in the 1980s and 1990s. In Australia, the 1992 Broadcasting Act, which created the Australian Broadcasting Authority, moved the media in the direction of a market-based, less interventionist approach to media regulation. While we maintain stringent local content quotas and cross-media ownership regulations, critics assert that the media is consolidating into fewer and fewer giant transnational cartels, and producing entertainment that is homogenous, bland and uncritical. Despite such heavy regulation, our media is less ‘diverse’.

What is diversity?

In February 2003, The Guardian conducted an analysis of the editorial line on the Iraq War in all 175 Murdoch newspapers around the world. It argued that each one supported American involvement in that conflict, and that they:

all are singing from the same hymn sheet. Some are bellicose baritone soloists who relish the fight. Some prefer a less strident, if more subtle, role in the chorus. But none, whether fortissimo or pianissimo, has dared to croon the anti-war tune. Their master’s voice has never been questioned.

Australian media policy is aimed at encouraging the diversity that The Guardian claims News Ltd’s coverage is lacking. The 1992 Act states as one of its objectives that its aim is to promote a ‘diverse range’ of broadcasting services offering education, information and entertainment.

But quantifying diversity is not as simple as listing whether a newspaper supports or opposes the War in Iraq. A glance over the Melbourne television guide presents an extremely wide range of genres — drama, sitcom, reality, sport, news & commentary, music, documentary — each of which can be divided further into its own subcategories. It would be hard to argue that both Rove Live and SBS’s current affairs programme The Cutting Edge would have a ‘homogenous’ political viewpoint. Even the difference between viewpoints expressed in Neighbours and Home and Away can be significant enough to warrant a ‘diverse’ rating.

When is content sufficiently diverse? Does the mere fact that a programme is broadcast in another language qualify it as diverse? If every newspaper were published in a different language, yet held the same editorial line on contentious political issues, would this be sufficient? While these examples may seem facetious, they highlight the ambiguous nature of the cries for diversity in our media. Media diversity is widely advocated for a host of social and cultural reasons, yet few participants in the debate are willing to address the practical applications.

The inelegance with which local content rules try to enforce a one-sided diversity attests to a simple fact — these appeals are more often than not either veiled protectionism or attempts to silence opposing viewpoints.

In reality, we are experiencing an age of unparalleled media variety. If diversity of opinion is what critics desire, then they should take solace in the multiplicity of content provided by the explosion of entertainment options. In Australia, there are 259 commercial radio stations, and more than 2,000 community and narrowcast stations. Cable television offers a massive range of stations, and TV programmes, from Nickelodeon to the Australian Christian Channel and from BBC World to Fox News. DVDs, podcasting, satellite radio, not to mention the Internet, provide more media options — and more diverse voices — than it is possible to survey.

Their master’s voice?

Does the ownership of broadcast and print services even matter? It is constantly suggested that media services are being consolidated into massive international conglomerates, and that these serve to exclude ‘voices’ which diverge from their corporate view.

But the relationship between ownership and content is far more complicated than is generally acknowledged. Communications researcher Benjamin Compaine’s recently released paper ‘The Media Monopoly Myth: How New Competition Is Expanding Our Sources of Information and Entertainment’ argues that, in the United States at least, there is no reason to suggest that corporate ownership is having a deleterious effect on the quality and diversity of programming.

Instead of providing the media moguls with an uninterrupted outlet to spread corporate propaganda, the drive for profit increases the alternative voices available. Michael Moore’s self-promoting blustering aside, the vehemently anti-Bush documentary Fahrenheit 9/11 was financed and produced by Miramax — a subsidiary of Disney — and distributed by Lions Gate Entertainment, an enormous media conglomerate with interests in a wide range of industries. The film went on to become the highest grossing ‘documentary’ in history.

It could not be argued that Fahrenheit 9/11 played to any corporate message. On the contrary, the documentary was in fact strongly supported because it was an alternative message — and alternative, anti-establishment messages can be a great way to make money. Big business is regularly portrayed as a moral enemy — even by media executives themselves. A recent James Bond film, Tomorrow Never Dies, in which a megalomaniac media baron tries to foment war with China by sinking a British battleship, was produced by MGM, now a subsidiary of Sony Entertainment. It could not be argued that the media are producing mere corporate propaganda.

In Australia, Margo Kingston rails against the corporate ownership of media in her screedish Not Happy John: Defending our Democracy — published by the Penguin Group, which is owned by the massive Pearson Plc. Kingston’s book was enormously successful, and can be found in major, corporate bookstores around the country. To accuse the mainstream media of drowning out dissenting voices, while simultaneously having one’s book published by one of the largest publishers in the world, is absurd.

Media quality

There are some indications that media output produced by conglomerates is of a higher quality — although this is obviously much harder to pin down. The US-based Project for Excellence in Journalism has attempted to do just that by a range of methods for quantifying ‘quality’ journalism. One method consisted of surveying all the often ambiguous and contradictory academic literature on the subject and looking for general patterns. The study, which focused on newspapers, showed that most of the literature connected higher expenditure with higher quality — variously defined — and then consequently with higher circulation.

Another study ‘Does Ownership Matter in Local Television News?’ gathered together a panel of 14 industry professionals and asked them to rate, over a five-year period, the quality of news broadcasts in a variety of genres. The study found that, while smaller stations tended to produce higher quality newscasts than large network stations, the highest quality was produced by those whose parent company owned a newspaper in the same market.

The study found significant differences between newscasts depending on their ownership structure. For instance, cross-owned stations aired more than one side of a controversial story half of the time, compared with just over a third of the time for those with no horizontal interests. They also tended to rely less on syndicated feeds. Rather, the company, as a whole, did more of its journalism in-house. While there were a few complicating factors in the analysis, the study concluded that, by and large, cross-media ownership tends to produce better quality news broadcasts.

Media (de)consolidation

That media corporations are continuously merging into ever-larger empires has become an accepted truism by most commentators. Indeed, in Australia, the small number of owners with large profiles (Packer, Murdoch) helps to reinforce this impression. But, when considering the international context of media conglomerates, the opposite is the case. Certainly there are enormous media companies, but it is deconsolidation that is the trend. Right across the industry, companies are divorcing and restructuring at a rapid rate. Viacom, the corporate owner of, amongst other things, MTV, Showtime, Simon & Schuster and Paramount, is splitting into two entities at the end of June. Disney is splitting with Miramax. AOL and TimeWarner, who merged a few years ago to cries of doom from political commentators, are also considering separation after enormous losses. Even News Corp may be considering splitting up.

It seems that ‘synergy’, that cringe inducing slogan for media consolidation, is dead. Big media corporations, trying to cope with the new markets created by technology and diversity of content, are struggling to ensure profitability. Even before they announced their June split, Viacom had shed Blockbuster Video, which was threatened by Internet rental services such as Netflix, and the increasing consumer ownership of DVDs. Instead, a simpler business model is preferred in this new era — one which can quickly react to ever-changing demand.

Conclusion

This article has not directly considered the radical consequences that the Internet and its secondary technologies — such as bittorrent, podcasting and blogs, which, in a few short years, have suddenly democratized the media — will have on quality, diversity and ownership. But it is clear from the overview provided that the effect that ownership has on the media is by no means as opaque as many popular critics assert. The relationship between the drive for profit and the drive for quality or diversity is not a mutually exclusive one. The widely and enduringly held views surrounding the Australian and international media must be re-examined closely.

Why do drug dealers live with their mums?

A review of Freakonomics: A Rogue Economist Explores the Hidden Side of Everything By Steven D. Levitt  and Stephen J. Dubner. (William Morrow, NY, 2005, 242 pages)

One day in 1989, at the behest of his graduate advisor, Sudhir Vankatesh, a young PhD student, strolled into a housing project on the shore of Lake Michigan carrying a multiple choice, seventy-question survey. The first question on the survey was:

How do you feel about being black and poor?
a. Very bad
b. Bad
c. Neither bad nor good
d. Somewhat good
e. Very good

The lifts didn’t work, so he took the stairs. On his way up he stumbled across what turned out to be a gang of junior-level crack dealers, who were using a stairwell as a base for operations in an ongoing gang war. After a long period trying to convince them that he wasn’t a threat, he attempted to read out his questionnaire. As he would later tell his University of Chicago colleagues, the test should have looked like this instead:

a. Very bad
b. Bad
c. Neither bad nor good
d. Somewhat good
e. Very good
f. F— you

After this inauspicious start, Vankatesh befriended the gang, and eventually its leader, J.T. After two years of unfettered access to all the gang’s activities, he emerged with a stack of well-worn spiral notebooks — a complete record of the gang’s financial transactions over a period of four years. Wages, sales, dues, death benefits paid out to the families of murdered members, everything. With such priceless documents, Vankatesh quickly came into contact with Steven Levitt, a young Chicago economist.

Steven Levitt has made a career of asking peculiar questions. Which is more dangerous — a gun or a swimming pool? Do black children’s names hurt their career prospects? Do parents really matter? With Vankatesh’s spiral notebooks, he posed the question — why do drug dealers still live with their mothers?

The book, which he wrote with New York Times journalist Stephen J. Dubner, is an anarchic, disorganized, and immensely entertaining survey of Levitt’s research. As the authors enthusiastically proclaim, the book has no ‘unifying theme’, but is, instead, a exploration of the hidden side of conventional wisdom.

Often, the topics for analysis seem mundane. They spend a chapter studying what conclusions can be drawn from children’s names. For instance, the parents of a child named Angel have, on average, 11.38 years of education, compared with Lucienne’s parents, who have 16.6 years. Similarly, how a name is spelt can be an indicator of parents’ education levels—Jasmyn’s parents have, on average, one more year of schooling than Jazzmin, and nearly two more years than Jazmine.

But their left-field analysis isn’t restricted to the mundane. Levitt gained an enormous amount of publicity from a 1999 study which concluded that rather than innovative policing strategies or police numbers, tougher gun controls or a booming economy, the single most important factor in the massive reduction in crime over the last decade had been legalized abortion.

His logic is simple. Women who are most likely to seek an abortion — poor, single, often minorities, and young — are also the most likely to be those whose children would grow up to be criminals.

The controversial nature of this conclusion, if it wasn’t lost on Levitt when he completed the study, was certainly reinforced after the publication of his 1999 paper. He was called, by both sides of politics, an ideologue, a eugenicist, and a racist.

As a ‘rogue economist’, Levitt has done remarkably well. He has been offered jobs by both Bill Clinton and George W. Bush. His undergraduate paper, which asked ‘Do more police translate into less crime?’, is still cited as the rebuttal to the liberalized punishment system of the 1960s and ’70s.

Freakonomics is a controversial and a provocative book. Levitt’s only real message is to encourage confrontational questions, and this is certain to secure him a permanent following.

The Debate: Campaign Spending

Should campaign spending be capped after Malcolm Turnbull’s $600,000 Wentworth win?

NO: Limitations on the amount of money spent on election campaigns and the way it is spent do not create the egalitarian political landscape that their supporters claim.

There is considerable evidence to suggest that spending caps reduce the competitiveness in electoral races and work against challengers and in favour of the incumbents.

Incumbents are already well known throughout their electorates and their positions clearly defined, in part, because of past spending but most importantly, because they hold the keys to the public treasury.

Incumbents are able to use their positions to gain financial and promotional advantages that their challengers are not.

Spending caps don’t work. Experience shows us that spending goes underground.

Soft money raised by unions, political action committees and other ill-defined lobby groups — nominally independent of political parties but in reality closely aligned — has just as much influence on the electoral process than any money collected by the parties or politicians themselves.

Chris Berg is the director of communications for the Institute of Public Affairs

ACCC Should Be Good Sports

The chairman of the Australian Competition and Consumer Commission, Graeme Samuel, argues that if Telstra acquires the exclusive right to broadcast popular content on mobile phones then its competitors will be discouraged from investing in modern infrastructure. This is not the case.

By allowing service providers like Telstra the capacity to provide exclusive content to their customers, it encourages other networks to develop similar offers.

Optus already provides video news to their mobile customers.

Other phone and internet companies are contentedly building new infrastructure and developing new technologies to provide better, higher quality services to consumers. In the drive to attract more consumers, companies are forced to be more creative and more innovative.

Samuel argues that if Telstra is allowed to provide its customers with Australian Football League statistics and replays then this may cease. This is disingenuous at best.

To pick on one type of entertainment, popular though it may be, and then decide that it is suddenly a public good seems absurd. Exclusive sporting content is not the barrier to third-generation telecommunications competition that the ACCC thinks it is.

Leave sporting rights alone.

Nothing would encourage the competition that the ACCC is sworn to defend like letting the providers actually compete.

There Can Never Be Too Much Sport, Mr Samuel

While the first footy game of 2005 might still be weeks away, former AFL commissioner and now chairman of the Australian Competition and Consumer Commission Graeme Samuel recently kicked off the pre-season competition. He suggested that the ACCC was considering regulating the sale of the rights to broadcast AFL games over the internet and via mobile phones.

Samuel’s target is Telstra, which he fears will use its substantial financial resources to buy the exclusive rights to matches.

The problem, according to him, is that customers will prefer the internet and mobile phone products of a company that carries AFL games, compared with a company that doesn’t. And this, according to the ACCC, is anti-competitive.

On this logic the AFL grand final is anti-competitive because only one team can win.

If this is an indication of an ACCC keen to redefine anti-competitive behaviour, then the regulators are going to be very busy cracking down on auction houses, the record companies, film studios – indeed, anything that exclusively sells a unique product.

It’s about time that Samuel and the ACCC narrowed their focus to actual cases of market failure

Leaving aside the question of whether the ACCC has the power to act in such a matter – which arguably it doesn’t – there is the more fundamental question of why Samuel believes it is the role of government to interfere in the sale of broadcast rights to football games.

The AFL should be free to sell its own product to whoever it wants, for whatever price it wants, and under any conditions it determines. For as much as we here in Victoria might like to think otherwise, Australian rules football is not an essential commodity.

The commercial justification for the ACCC’s interference is flimsy to say the least, and if Samuel gets his way the diversity of products available to consumers could actually be reduced.

Telecommunications providers require “content”. The more material they have to broadcast the more willing customers will be to sign up. So to enhance the value of their internet broadband and mobile telephone services, companies provide extra content to subscribers – cheap legal music downloads, video rentals, movie trailers and sports.

The internet enhances the home experience of sport by increasing the content available. By bundling content with their basic internet packages, companies can offer the consumer better value.

Rather than lessening the sport available to Australians, a deal between Telstra and the AFL will provide more.

It’s about time that Samuel and the ACCC narrowed their focus to actual cases of market failure.

Why is he trying to protect us from too much sport?