by George Tyler on 23 May 2018 on Social Europe Journal
Fake news in America’s public square is a failure of its information marketplace. Remediation should occur through enhanced marketplace competition, not government censorship.
I have argued that the quality of democracy is lower in America than in much of Europe. It lacks co-determination, for instance, which is why US wages stagnate even as inflation-adjusted wages in northern Europe have risen steadily for decades to leapfrog American ones. More broadly, the preferences of Americans are less reflected in public policies than in Europe, feeding discontent with US democracy. Americans have less confidence than Europeans in their legislative and judicial institutions. Fewer than half of Americans believe it’s “absolutely important to live in a democracy;” the share rejecting democracy is more than double that in Northern Europe. And one-third of Americans have come of late to support “a strong leader who doesn’t bother with Congress or elections.”
America’s pay-to-play politics and unrepresentative electoral system are causal factors (conservatives mock reformers as “simplistic” majoritarians). But equally important is the failure of its information marketplace, awash with fake news.
Enlightenment And Censorship
The age of enlightenment informed by the Inquisition and censorship victims such as Socrates, Joan of Arc, Galileo, and Thomas More energetically embraced free speech. Its clarion call was John Milton’s 1644 Areopagitica speech to Parliament. Milton has been restated famously in Supreme Court Justice Oliver Wendell Holmes’ 1919 opinion (Abrams v. United States) rejecting censorship unless speech “so imminently threatens immediate interference with the lawful and pressing purposes of the law that an immediate check is required to save the country.” Censorship is unwarranted, argued Holmes, except in extremis because fables typically fade in the marketplace of ideas: “the best test of truth is the power of the thought to get itself accepted in the competition of the market.”
Enthusiasm for Milton’s desideratum by America’s constitutional fathers was tempered by failure of what we today would term Holmes’ information marketplace. In the wake of Shay’s Rebellion in 1787, for instance, Elbridge Gerry lamented the dissemination of fake news in the new nation by “pretend patriots … (voters) misled into the most baneful measures and opinions, by the false reports circulated by designing men.” And James Madison considered the “artful misrepresentations by interested men” an existential threat to the new nation, warning ominously (with sobering contemporary relevance), “a popular government, without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy.”
Even so, the censorship regime that has evolved in America is more permissive than in Europe where hate speech – informed by the 20th century abuse of free speech by Nazis and other home-grown fascists – is criminalized. The deaths of 80 million will bring that. Reflected in the European Convention of Human Rights and the International Covenant on Civil and Political Rights and supported by the European Court of Human Rights, European nations (and Canada) temper speech. For instance, the ECHR is obligated “to sanction or even prevent all forms of expression which spread, incite, promote or justify hatred based on intolerance ….” In contrast to the open display of Nazi paraphernalia in Charlottesville, for example, France prohibits its sale while Germany bans Nazi emulators and would jail neo-Nazi marchers that the US Supreme Court embraced in its decision National Socialist Party of America vs. Village of Skokie(1977).
The Broken American Information Marketplace
Canada, France and Germany sanction hate speech while broadly encouraging a plurality of opinion and fact-based reporting by broadcasters and print media. That has caused fake news to become concentrated on social media there, most prominently in Russian propaganda campaigns. Indeed, the Kremlin has targeted both European and American voters, stirring racial animosity and promoting favoured candidates including Geert Wilders, Donald Trump, and Marine Le Pen. In response, the EU led by France and Germany is seeking to corral fake news on social media. In contrast, the American reaction has been dilatory, despite objective recent research demonstrating that it likely accounted for the election of President Trump.
American indulgence of fake news is unwarranted. Contrary to the position of US conservatives, voters demonstrably do not intuit the truth during periods like today when fake news dominates, information markets lack objectivity, and factual reporting is demonized. Indeed, the Third Reich, and the millennia featuring the divine right of kings, the biblical foundation of slavery and the like provide ample evidence that Justice Holmes’s expectation of truth prevailing in the marketplace of ideas ignores the woeful lessons of history.
For truth to prevail, the information marketplace must be competitive and facts nurtured. Utilizing the Holmes formulation, the American information marketplace is broken, factual reporting drowned out by mostly conservative partisans. Fabulists in the White House and Kremlin along with entities such as Fox News and Sinclair Broadcasting have weaponized fake news. They have demonized fact-based journalism so effectively that more Americans believe that the mainstream press is their enemy than trust it. Indeed, President Trump’s wielding of fake news and attacks on factual reporting are major factors responsible for America’s plunge to 45th place in the World Press Freedom Index by Reporters Without Borders. Norway ranks first.
Resurrect The Fairness Doctrine To Repair America’s Broken Information Marketplace
Government censorship is one remedy for information market failure. A better option is to enhance the competitiveness of the American information marketplace by resurrecting the Fairness Doctrine. It was a rule issued in 1949 by presidential appointees at the Federal Communications Commission (FCC) responsible for regulating television and radio. Over four decades, American broadcasters were obligated under the Doctrine to provide competing viewpoints objectively and air a full range of opinion while allowing rebuttal opportunities to those criticized. The Fairness Doctrine did not guarantee that broadcasters only report facts. But the obligation to provide equal coverage discouraged fake news. It biased broadcasters toward self-regulation that embraced fact-based reporting and away from embarrassing half-truths and fake news.
History affirms that the Doctrine is an effective device to add new, factual voices to the marketplace. It produced a common body of facts available to all voters, continually tested and expanded by independent investigative journalists vigorously competing with each other. The American information marketplace occupied the sweet spot where national leaders, Russians, ideological media proprietors and political partisans had to contend daily with thousands of rival journalists enjoying equal access and airtime to present fact-based reporting.
Generally conservative proprietors bridled at the equal access rules and persuaded President Ronald Reagan to abandon the Doctrine in 1987 despite majority support in Congress. It has since fallen into obscurity. Even Democratic Party Presidents Clinton and Obama were unwilling to risk the ire of powerful broadcasters by resurrecting the Doctrine. The censorship of disfavored information and dissemination of fake news in the decades since by broadcasters is a reductio ad absurdum of conservative criticism of the Fairness Doctrine.
While Trump and the Republicans who garner political advantage from weaponized fake news will resist, appointees to the FCC by a new president could resurrect the Fairness Doctrine without constitutional hindrance. The American Supreme Court in Red Lion Broadcasting v. Federal Communications Commission (1969) embraced that Doctrine. It concluded that the information-access right of viewers and listeners is superior to any speech rights asserted by broadcast proprietors. Indeed, as explored in Billionaire Democracy, that Doctrine should be applied to social media as well: the right of voters to factual information as expressed by America’s founders is superior to any right of media proprietors to profit from fake news clickbait.
Fake news is the strongest possible signal that US information markets are broken, the factual information required for a high quality democracy obfuscated. Those markets should be rehabilitated and strengthened by reestablishing a modern Fairness Doctrine.
by George R. Tyler March 18, 2014 12:15PM (UTC) on Salon
Our GDP growth is currently outpacing Europe’s, but their future still looks brighter. Here’s why.
This article originally appeared on The Globalist.
The fact that GDP growth in the United States currently outpaces European growth by a large margin might lead one to believe that America’s economic future is brighter than Europe’s. Nothing could be farther from the truth.
Despite all the reflexive triumphalism, the U.S. economy has produced poor investment and wage outcomes for a generation. Meanwhile, northern European economies have achieved something that increasingly eludes the United States – a growing middle class.
Remember the famous line “I’ll have what she’s having” from the movie “When Harry Met Sally”? It is apt in our context: Americans need what northern Europeans have.
There are those who argue that making this point amounts to heresy. After all, the European Union is struggling to reorder its flawed architecture, stabilize public debt and, most important, regain a decent pace of economic growth.
Yet beneath those daunting challenges, the seasoned and potent internal institutions, crafted in the postwar years in northern Europe to broadcast prosperity widely, continue to function smoothly.
U.S. obsession with quarterly capitalism
Unfamiliar to Americans, these corporate governance and wage systems have succeeded precisely because they reject the American executive incentive structure. Europeans have studiously not embraced what Nobel Laureate Edmund Phelps has called “short-termism.”
At the core is the continuing U.S. obsession with quarterly capitalism. This is an unnatural focus for any business that can be explained only by the fact that a stock-optioned management is focused on near-term performance.
But its real life effects are truly problematic: For example, if that means being parsimonious with corporate outlays for R&D, wages, investment and the like in order to spike quarterly earnings, so be it.
In the U.S. model, what matters is not the long-term success of the company, but one’s own ability to extract maximum personal benefits while one is along for the ride. That is a most rudimentary form of capitalism, one that may compete with Manchester capitalism for the trophy in wrong-mindedness.
Europe does well
Let’s look at specifics and begin with productivity, the most important economic indicator of economic prowess. Since 1979, annual productivity per hour worked in northern Europe has grown one-third faster than in the United States year in and year out. Equivalence now exists on the factory floor in the United States, France and the Low Countries.
Weak U.S. investment is the most conspicuous reason. In a big change from the postwar years, investment by non-financial firms in Australia and northern Europe has outrun investment by U.S. firms in recent decades, as documented by Eurostat economists in 2009.
U.S. net investment is less than one-half the level it was in the late 1980s. Studies document that U.S. managers apply excessive discount rates when evaluating future investments. They do so by screening out worthwhile options, due to inappropriately short investment time-horizons compared to managers in these other rich countries.
An error to blame globalization
Quarterly capitalism arose in the United States from the incentive structure created by inept attempts in the 1970s and 1980s to address the age-old “agency problem.” According to that, management prioritizes returns by what it means for executive suites rather than for shareholders.
The unintended consequence of the solution manifests itself today in the weak corporate boards of publicly held U.S. enterprises.
In a short-term world, higher wage bills also affect corporate bottom lines, just like higher investment and R&D outlays. Unlike European counterparts, U.S. enterprises have made it their cause to compress wages. They have done so by weakening unions and by offshoring. (I have detailed this delinking of wages from rising productivity in my book What Went Wrong.)
That decoupling has not occurred in Australia or northern Europe. Indeed, comprehensive employer labor costs and wages have grown roughly apace with productivity there. They now average $10 per hour more in purchasing power parity terms than in the United States.
Globalization is erroneously blamed for U.S. wage compression. That is an argument belied by the fact that higher-wage northern European nations are considerably more engaged in cross-border trade than is the United States.
OECD statistics show that the top 10% of Americans receive $16 dollars in income for every $1 received by the lowest tenth. That is more skewed than the income distribution in Portugal and nearly comparable to Turkey, two economies dominated by thin layers of the affluent. The distortion of U.S. income distribution is twice as severe as any other rich democracy.
Improve skills and change corporate governance
In a short-term world, human capital investment can also be seen as a drain on bottom lines. Accordingly, U.S. firms have come to eschew up skilling, in stark contrast to nations abroad. That is why Australia and every nation in northern Europe has leapfrogged the United States to now have more skilled workforces, in contrast to the situation in 1998.
The ability of Australia and the northern European economies to broadly deliver rising real incomes during the era of globalization dramatized the American failure to do so.
The key remedy is to change the prevailing incentive structure. This would require confronting U.S. management with the architecture of northern European corporate governance and ending short-termism.
This would also mean adopting the successful German codetermination governance model in which employees sit on corporate boards (ironically, an innovation imposed by British and American officials in the early post-WWII era).
Viewed over the longer haul, as opposed to isolated annual quarters, corporate owners and shareholders will benefit from higher returns that result from higher investment, including in the workforce.
A healthy byproduct of codetermination has been higher wages, as nations across northern Europe have adopted local variations of the Australian wage determination mechanism, which links wages to rising productivity year after year.
Americans are fortunate to have well-tested models abroad to rectify the deficiencies of their own quarterly capitalism. The question is whether the American genius for adapting new technologies extends to practices from across the globe.
Doing so requires acknowledging that other countries’ models have something to offer and then overcoming resistance from those who benefit most from the current allocation of gains from growth.
Game on, American people.
By George R. Tyler, February 8, 2018 on The Globalist
Why can’t the U.S. follow the example of other, truly democratic nations in limiting the influence that very rich people can have on elections?
The U.S. election system is a stark outlier among wealthy democracies. Nearly all other wealthy democracies tightly proscribe campaign contributions and independent political spending to prevent political inequality, the distortion of public opinion and corrupted lawmakers.
Another goal is to prevent American-style polarization caused by negative advertising. Particulars vary, but nearly all mimic Germany and the United Kingdom in preventing what is called pay-to-play in the United States by sharply capping electioneering campaign spending.
Moreover, peer nations also subsidize candidates and small donors to further free political parties and candidates from reliance on large donors.
These higher quality democracies also restrict political TV and radio advertising opportunities, with those limited opportunities usually provided free or inexpensively.
Election campaigns are limited to a few months in duration as well. In addition, financial contributions by corporations and entities that are independent of candidates and political parties (similar to Warren Buffett or the Koch brothers’ Americans for Prosperity) are prohibited or strictly circumscribed during elections on behalf of politicians or policies.
As a result, American-style negative advertising on TV and elsewhere is absent in virtually all Western democracies. (The glaring exception everywhere are social media).
There are tight limits on electioneering spending by parties or candidates in higher quality democracies. For instance, the nationwide campaign spending by the CDU, German chancellor Angela Merkel’s party in 2013 was $27 million. It was even lower in France in 2012 and 2017.
Influencing election outcomes
Other tight limits apply to citizen donations and independent spending. Voters in other wealthy democracies are comfortable with such tight caps. They would be shocked if opaque, powerful groups could spend unlimited amounts of money for years to mold public opinion and influence election outcomes. Heavy-spending individuals such as the billionaires Sheldon Adelson or Paul Singer are effectively allowed to speak with the voice of tens of millions.
Indeed, peer nations are so determined to avoid vote buying that even the Financial Times — Britain’s equivalent of the Wall Street Journal — rather remarkably demanded in a 2015 editorial that private contributions be entirely abolished. British politics should be funded solely by taxpayers:
“If the political class at Westminster is to have any chance of winning back public trust, it needs to end the suspicion that the culture of political donations is corruptible. The only way to do this is a system of taxpayer funding . . .”
Britain and the Declaration of Independence
This is more than ironic. Britain — the abhorred example of political corruption for colonial Americans — has come to hew far more closely than the United States to the original intent of the founding fathers to excise all political corruption, defined most broadly.
Australia is the only wealthy democracy other than the United States to allow unlimited political donations and independent third-party political spending, including by corporations.
The similarities end there, however. Australian pay-to-play is on a tiny scale. The ten biggest donor corporations, for instance, contributed a total of $3 million during the 2016 general election there — a rounding error in American pay-to-play.
Limiting electioneering spending
More than 70 nations further reduce the need for private campaign donations by providing candidates with public funding to defray electioneering costs. The goal is to avail citizens of a factual, full airing of genuine policy differences between candidates and between political parties.
The outcome is robust and highly competitive elections where the weight of ideas and policy prescriptions are the determining factors rather than weight of wallet.
European nations provide candidates and their political parties an average of about $5 per voter in public funding, with the greatest level at $15 in Norway.
Such subsidies represent about 40% of spending by candidates and political parties over an election cycle. In France, for instance, public subsidies equal 47.5% of permitted electioneering spending.
The balance of campaign funding is derived from small donations, typically incentivized by tax credit as in Canada, France and Germany. Political parties in Germany garnering 0.5% of votes for Bundestag (federal) candidates receive €1 ($1.25) for each of their first four million votes and 83 cents per vote received thereafter. Plus, there is an upper cap on tax credits granted for individual and total donations.
Combining a limited need for campaign donations with public funding has successfully freed lawmakers from reliance on wealthy contributors. The proof is voter sovereignty: Policy outcomes of other wealthy democracies do not reflect an American-style income bias.
Editor’s note: This feature is adapted from Billionaire Democracy: The Hijacking of the American Political System (BenBella Books, 2018).
by George Tyler on 26 March 2018 on Social Europe Journal
The high quality democracies of northern Europe are an unnatural construct, history teaching us that the universal default setting of human society is authoritarianism. There are many key elements in crafting and sustaining such high quality democracies, including engendering a common body of trusted information, a communitarian spirit, the rule of law and the like.
The element most under stress in the European Union at the moment is the pillar of an electorate informed by a common body of facts. That stress exists because of conflict between the core responsibility of media platforms as truth tellers and the business model of social media platforms like Facebook and Google. Resolving that conflict to ease the existential danger it poses to the high quality democracies requires that social media platforms conform to the traditions and obligations of other media (print and broadcast) platforms as fact-driven societal rapporteurs (by mission at least).
In April, the European Commission will release its first set of notions on how member governments and social media platforms tech groups should tackle internet fake news. Critics warn it will fall drastically short of crafting a social media environment comparable to the European print and broadcast media environment emphasizing truth-telling.
Instead, the notions will be drawn in part from a report requested by the EC and issued on March 12. The industry-friendly authors concluded that steps to stem fake content should be addressed with voluntary guidelines. The report quixotically recommended that social media platforms help users identify fake news and support fact-based journalism. (Will Google soon hire investigative reporters and Facebook share profits with Berliner Zeitung, the Guardian, Le Monde and the New York Times?) The participants’ most fundamental error was failing to draw equivalence between the obligations of social media platforms analogous to those borne today by other media platforms as truth-tellers.
EU officials are intimidated by social media platforms, the industry attitude summed up by Twitter representatives testifying before British officials in early March, “We are not the arbiters of truth.” Social media platforms are loath to censor fake content, acutely cognizant that its novelty and sensationalism makes it more alluring to readers than factual content. It travels faster and further, each repetition producing revenue-generating clicks.
The differential allure of fake news was most recently documented by researchers at the Massachusetts Institute of Technology. Utilizing the huge data base of every tweet written between 2006 and 2017, they found that fake tweets were 70 percent more likely to be retweeted than factual news. The most repeated fact-based news reached perhaps 1,000 people while the top 1 percent of fake news reports (about politics, for instance) reached up to 100,000 readers.
Dithering by the EC in corralling social media platforms has the most serious consequences for democracy. For instance, there are over 30 Czech language websites actively disseminating pro-Russian propaganda as you read this – a mendacious xenophobic blend of praise for Putin, invented conspiracies, fake news coupled with demonization of political opponents, NATO, Germany, France, foreigners and the European social democratic model. These sites have become the main source of information for a full quarter of Czechs. They form the core of support for the pro-Russian Czech president Milos Zeman, applauding his intended dissolution of an independent press and Czech judiciary. Authoritarian propaganda carried by Facebook, Google and the like has skewed national attitudes, causing Czech support for NATO to fall below 50 percent; even fewer support the EU. Similar active sites exist in every other EU nation with a similar goal of debilitating democracy by fomenting disunity and discord.
Change Is Coming?
There are three options for cleansing social media: Flagging, ex-postcurating (censoring) and ex-ante curating.
Flagging: Social media platforms have deflected pressure to curate fake content by enlisting third parties like Correctiv, Snopes and PolitiFact to investigate user complaints and flag offensive postings. Google, for instance, has enlisted Wikipedia to evaluate and flag YouTube’s content. (Google’s revenue was nearly €100 billion in 2017; Wikipedia is volunteer-driven and funded by donations.) Moreover, flagging may well exacerbate the content crisis. Yale University researchers found that flagging caused a scant 3.7 percent of readers to be less likely to believe the fakes. Worse, it appears to make the flagged flamboyant content or heinous acts click bait.
Ex-Post Curation: The dodging of accountability for content by internet firms incentivized Germany to pass the 2018 Network Enforcement Law imposing fines of up to €50 million on platforms that fail to take down fake or heinous material within 24 hours of being reported. The EC followed suit this month. Yet, ex-post curation is imperfect. For instance, Google has granted only 43 percent of the 2.4 million requests received under the EU’s “right to be forgotten” 2014 ruling by the European Court of Justice, requiring firms to delete results fingering individuals or corporations. Far more worrisome, the concept of ex-post curation is fatally flawed because it allows fake content to metastasize, globally disseminated, unrecoverable, even if the initial posting is promptly deleted. Ex-post curation will not stop the proliferation of fake news, doctored videos, beheadings, Russian disinformation and other pathologies being published by social media.
Ex Ante Curation: Social media platforms largely avoid the onerous chore routinely borne by other media platforms of ex-ante content curation. Yet, they have that prowess. The platforms already ban some users who run afoul of government regulations or platform rules. Facebook recently took down some terrorist sites. After many risible delays, it banned the conservative firm Cambridge Analytica for harvesting user data without permission to subliminally manipulate tens of millions of American voters. It will soon ban cryptocurrency scams. And it also recently removed the Islamophobic “Britain First” hate group that routinely ran doctored videos and incendiary fake news to sow racial discord. (In each of these instances, Facebook reluctantly acted only under public or government pressure.)
Playing Russia’s Game
Social media platforms are the centerpiece of Russian state efforts to destroy the common body of knowledge central to Europe’s high quality democracies. Russian military intelligence views the platforms as useful idiots. Facebook, Google, Apple and the like should reconsider their roles as Russian enablers. They should commit to fulfill the traditional obligations of media platforms as truth tellers. That will be a difficult undertaking involving the ex-ante curation of most proposed user feeds in order to broadcast only factual content that meets community standards. (As private enterprises, they enjoy the legal right to ex-ante curate under both American and European law.)
The EU is expected to adopt General Data Protection Regulations in May. That is an opportune moment for EU members to craft a process and schedule requiring social media platforms to meet the traditional responsibilities of other media platforms.
Failure of EU member states to mandate equivalence will make them as complicit as Facebook, Google and Apple in the Russian campaign to destabilize their democracies.