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Hollywood vs. U.S. manufacturing jobs: Doctorow column vindicates TeleBlog—so will Cory now confront pols directly?
June 13, 2007 | 2:40 am
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By David Rothman
“Just what trade protections for nonHollywood types are U.S. officials bargaining away in the name of DMCAism?” I asked in 2003. “”Won’t anyone from the media investigate? Hollywood brags about the money it brings in from overseas, but, in the future, how much of that will be at the expense of other industries? And has anyone done a cost-benefit analysis?”
TRIPSing up the American economy
Now I’m pleased to see Cory Doctorow raising similar questions in How Hollywood, Congress, And DRM Are Beating Up The American Economy, just published in Information Week.
“In 1995,” he writes, “the United States signed onto the World Trade Organization and its associated copyright and patent agreement, the TRIPS Agreement, and the American economy was transformed.
“Any fellow signatory to the WTO/TRIPS can export manufactured goods to the USA without any tariffs. If it costs you $5 to manufacture and ship a plastic bucket from your factory in Shenjin Province to the USA, you can sell it for $6 and turn a $1 profit. And if it costs an American manufacturer $10 to make the same bucket, the American manufacturer is out of luck.
Quid pro quo
“The kicker is this: if you want to export your finished goods to America, you have to sign up to protect American copyrights in your own country. Quid pro quo.
“The practical upshot, 12 years later, is that most American manufacturing has gone belly up, Wal-Mart is filled with Happy Meal toys and other cheaply manufactured plastic goods, and the whole world has signed onto U.S. copyright laws.”
Simply put, you can’t separate copyright from the economy at large, and I continue to be disappointed in politicians such as John Edwards who refuse to speak out on the damage that Hollywood is doing to the economy at large in various ways.
Ironically, if the United States economy continues to decline in the long run, Hollywood movies won’t be so attractive. Their appeal to the rest of the world isn’t just based on creativity but rather on the glamor of American’s high living standards compared to those in, say, China. But what happens when Washington bargains away the prosperity of the country at large to placate the entertainment industry?
One of the best points Cory makes: He notes that people in developing companies have more time than money on their hands—and that this encourages copying, regardless of whatever fantasies Washington may have of stopping this.
Time for action: I hope that Cory and other net.activists will speak out directly to politicians like Edwards who are relying on Netfolks for support. Edwards has been mute when I’ve asked him to speak out against the current DMCA and copyright-term extension.
Update, 10:53 a.m.: I’ve just added a chart (not found in Cory’s article) to the original TeleBlog post. I recognize there are all kinds of different interpretations of stats, but GDP share, to this layman anyway, would appear to be the bottom line.
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Comments:
I think Cory is really smart, but I think he is out of his depth with this analogy. Basically this quote is a bunch of hogwash – “The practical upshot, 12 years later, is that most American manufacturing has gone belly up, Wal-Mart is filled with Happy Meal toys and other cheaply manufactured plastic goods, and the whole world has signed onto U.S. copyright laws.”
The problem is that American manufacturing has not go belly up. The percentage of the economy that is manufacturing is very close to where it is was 12 years ago.
Hi, Alexander. I appreciate your additional perspective but would like to see the source of your info on manufacturing. From “The Outlook for U.S. Manufacturing”:
“All told, manufacturing production is expected to increase by 2.2 percent in 2007, slightly slower than overall GDP and down from last year’s 3.6 percent pace. Note: for the first time in more than a decade (1995), manufacturing’s share of the economy (12.1 percent) did not decline last year.”
Source of above is the National Association of Manufactures.
Thanks,
David
Once, I needed a big factory to produce my books. Now I produce them on my computer. So, manufacturing has declined as a percentage of the economy, right?
While many of us are in love with ‘stuff,’ I think that expenditures on virtual things (e.g., eBooks, games, video, music) will continue to increase as a percentage of economic output. Exchanging protection of intellectual property for letting the Chinese make t-shirts doesn’t seem like such a bad deal.
The bad deal is when we educate our children so badly they can’t write, can’t create, can’t program, won’t spend the time to learn to play their instruments, and generally can’t perform the functions necessary to create intellectual property.
Remember the 3-D printer on TeleBlog fairly recently? Don’t you think that sooner or later, we’ll all ‘manufacture’ most of what we need in the privacy of our homes using something like that? (I hope so because my current work in progress is about exactly this kind of scenario). In that world, big factories will be exactly as valuable as big steel mills in Pittsburg (e.g., places to set up wind farms).
Rob Preece
Publisher, http://www.BooksForABuck.com
Fascinating points, Rob, but can you really build an entire automobile at home? Also, what about the people who are unemployed now? Big thanks for some interesting perspective. David
Thanks to David Rothman for locating and adding the graph showing manufacturing as a share of Gross Domestic Product to his description. The diagram impressively reveals that Doctorow’s economic analysis is woefully inadequate. The graph depicts a powerful megatrend in manufacturing shrinkage (percentage wise) that began all the way back in the 1950s! Yet Doctorow cites the late date 1995 as a watershed moment because the U.S. signed onto the World Trade Organization. The trend-change in manufacturing since 1995 is dwarfed by the earlier changes.
I think that the copyright term should be substantially reduced and that DRM is counterproductive, but I do not subscribe to the crude protectionism that is eagerly embraced by some. The notorious Smoot-Hawley Tariff Act helped trigger the Great Depression but it certainly did not revitalize manufacturing. Similarly, the misguided enactment of new massive tariffs might cause another depression but it will not help manufacturers. Recall that the country of India maintained stiffly protectionist rules and tariffs for decades and it only seemed to preserve the impoverishment of the people.
Suppose somehow the United States was able to bring back some manufacturing jobs from low-wage countries such as China. For example, suppose a decade-long effort finally generated a collection of jobs for workers assembling footwear. The victory would be Pyrrhic because shortly after workers began to “enjoy” these jobs they would be automated out of existence. Doctorow is a science fiction writer, and he should know that progress continues rapidly in computers, software, and robotics. (Rob Preece makes an insightful comment on this general topic above). Many of these low-wage manufacturing jobs would probably simply disappear to automation if governmental intervention attempted to aggressively manipulate them. Of course this is just my humble opinion.
Cory’s comment on manfucaturing was a little odd. Leaving aside China’s repressive government, it is a good thing that the world’s poorer people are allowed to use their comparative advantage in manufacturing. Doesn’t bother me at all that the action figures I collect are made in Asia rather than Indiana.
Cory also says that a) copying bits is alway going to be easy and b) there’s still going to be a market for movies, music, etc. Maybe he’s right, but that’s going to be a drastically smaller market.
As I’ve argued before, Cory can give away his novel online and still make a ton of money because the # of people like me who had no problem downloading it and reading it entirely on my Treo are very small. As long as that stays the case, then giving away your novel is a fine idea. Once that is no longer the case (if that ever happens), then what?
For example, suppose tomorrow every RIAA company decided to simply give away high quality MP3 downloads of every CD on the presumption that this would drive CD sales. Does anybody seriously think this would be anything but a disaster and that CD sales would plunge?
What happens when e-book readers are as ubiquitous and seen as user friendly as MP3 players?
Maybe it doesn’t matter since so few authors seem to make serious money anyway and survive off of other gigs already.
Big thanks, Septimus, for the further analysis. In the long run, you’re very, very right—the low-skill jobs will be automated away. Short term, I do worry about people affected now. Are tariff walls the answer? Tough question, but China hasn’t helped by creating such a massive imbalance. I think my stance would be one of a free trader, but with tough environmental and unionization provisions in place. That way, the competition would be more equal. David
P.S. Detail: Manufacturing jobs require more smarts than in the past. Much of the automation is already happening—both here and in countries such as China.
The World Trade Organization is the organization responsible for preventing the imposition of arbitrary tariffs. To be a member required unanimous consent of other members. That meant that in order to become a member every country had to do their bilateral deals which involved a lot of horse trading– not just for copyright.
Once Russia satisfied the concerns of Hollywood/RIAA, US agreed to their admission to WTO. From then on, the jurisdiction for these things is no longer bilateral deals but World Trade Organization (or WIPO). The US had leverage once to extract concessions on copyright infringement from Russia only before it agreed to membership. It will not have this leverage once it agreed to WTO membership. From now on, the WTO has the authority to settle these disputes.
Is this any better? Who knows? But I doubt that any country (even a powerful one) could use tariffs and trade barriers without facing censure from WTO.
The U.S. needs to start seriously enforcing its trade laws.