July 19, 2011

Almost five years after having coined the word pronaocracy to describe the prevalent political regime in the Western world, i.e. the government of the people by the lobbyists for the corporate interests, I am finally able to give it a human face. Or rather two.

The first, "the elder Mr. Murdoch" as Sarah Lyall calls "the chairman of the News Corporation", has been unvoluntarily exposed as some kind of a Mafia don (*). As his web of political influence is blown away with his power to impose omertà in Great Britain, his capo warns us without irony current investigations "may prevent me from discussing these matters in details" when she testifies with her bosses before a parliamentary panel (1).

The second, Jeff Bezos, Amazon.com's chairman, "has an ambitious and far-reaching new agenda". According to Matt Richtel and Verne G. Kopytoff (**), he wants to rewrite tax policy for the Internet era", "eliminating sales tax for virtual sellers with only a modest physical presence in the state [of the purchaser]". Actually he dreams of no less than instauring direct pronaocracy.

As "the most powerful media baron of modern times", in Philip Stephens' words (***), Rupert Murdoch used to threaten elective officials. Most pronaocrats are content to bribe them with campaign contributions. Bypassing them all together, Jeff Bezos "send[s] the message that companies can fund a political campaign for a referendum", to borrow a phrase from Nancy F. Koehn, "retail historian at the Harvard Business School".

"Some opponents [...] say [Amazon] is putting its own profits above California, jobs and economic fairness". What else should one expect of a capitalist corporation? The real issue is the absence of any working mechanism to determine the general interest. As pronaocratic elections are only the continuation of competition by other means, this so-called popular initiative is but a war between Amazon's zombies and Walmart's minions.

"The wrongdoing at News International was exposed [...] by the dogged work of the Guardian and other newspapers", Philip Stephens points out. True enough but the primary goal of any independent newspaper is to make money, the very means of its independence. All the better when boosting circulation by reporting on corruption in high places coincides with the public interest. Still, does chance a dependable mechanism make?

For fairness to derive from chance, one needs decentralization, the first feature of any good recommendation system and any market if it be guided by Adam Smith's invisible hand. This may not be sufficient, but the natural pursuit by everyone of one's self-interest makes it at least necessary.

Today's fillip however is focused neither on how to defeat pronaocracy nor on how to ensure the future of newspapers. It should not be interpreted either as a condemnation of lobbyists' activity per se. For instance Ben Protess follows Mr Bartlett's progress through Congress on behalf of "100 of the nation's largest financial institutions" (****). Their expenses in pitching their case are high, in proportion to their stakes in shaping "the financial regulation enacted under the Dodd-Frank Act". That is what lawyers are for.

The real issues are whether the same organizations fund the reelection campaigns of the law makers they lobby and whether the officials they solicit seek opposite opinions. Read the British Prime Minister's indictment by John F. Burns (*****). "Since taking office in May 2010, Mr Cameron has met 26 times with Murdoch executives". Why not? But "[these] meetings exceeded all those with other British media representatives put together".

I leave the British voters to judge why their head of government let himself be so shamelessly bullied. I only notice that in America the US Supreme Court is ever eager to allow special interests to buy disproportionate access to voters so as to bully them under the Freedom of Speech tyranny.

Let's pretend though we live in a democracy. To find an elusive public interest, look for global efficiency and eliminate conflicts of interest.

Should for example virtual commerce be left untaxed? Absurd unless one favors feudal lords fighting to deprive the State of the means of its own authority. As for requiring physical presence to tax a transaction, the only test should fall on the buyer's residence, as the case today in principle.

In practice this means the State must require the sellers to collect the tax, as they are easier to audit. How difficult can it be in today's globalized world? Even if Jeff Bezos fled into the depths of the Amazonian forest, it would be in Brazil's self-interest to facilitate international commerce.

Yet only the largest suppliers can afford to collect for states scattered all over a virtual world. Despite his hypocrisy, as Amazon is one of them, Jeff Bezos makes a valid point. There is however a solution which does not require a uniform tax. Most payments for virtual transactions go through few, large credit networks. It would be quite efficient to tax them with the chore and tell them to include the cost in their merchant fees.

Dream on! Why not instead tackle the famous Freedom of the Press. For Philip Stephens, "Britain's libel laws [...] gravely restrict the media's capacity to expose the criminal and the corrupt. Judge-made privacy law is moving in the same direction." I am no lawyer nor would I dare judge a case solely on the strength of a wikipedia entry (2).

Still, if one publicly accuses another person of a fact which has the potential to damage this individual's reputation, I see some sanity in a system which puts the burden of proof on the accuser, lest rumors run unrestrained. Isn't it a public fact slander may kill, literally? To let the Rupert Murdoch's of this world attack the innocent with impunity under Public Interest's assumed mantle is jumping from the fire into the frying pan.

Yet, especially if policemen and judges are on the take and omertà enforced, an independent, pluralistic media provides a vital channel for whistle blowers. Justice will not be served if, to prove its facts, a newspaper must betray a source for whom anonymity is the sole protection.

To solve the issue, observe it stems from a conflict of interest. Why not take media at its word and allow it to protect its sources in the name of the public interest but on the condition it give back in taxes marginal profits made from the circulation and advertising boost due to its civic-minded reporting? Impractical? Don't economists put a price on every little variation on a basic offer? Ineffective? Does a Murdoch run non profit papers?

Sweet dreams. Would my readers wake up if caught in a nightmare? For the inhuman face of pronaocracy, merge Jeff Bezos and Rupert Murdoch.

Jeff Bezos may be less mean than Rupert Murdoch but consider how superior his means. Instead of being dependent on the cooperation, voluntary or otherwise, of the British police and cellphone operators, Jeff Bezos possesses the very data from which to dig dirt on demand. Were he want to spy on your buying every book, reading every page, he can. And Amazon's reputation of being casual when it comes to our Privacy is a fact.

In the Information Age especially, Liberty requires Privacy and Privacy requires democratic decentralization. Today we have none of the above.

Philippe Coueignoux

• (*) ......... Murdochs Agree to Testify Before Parliamentary Panel, by Sarah Lyall (New York Times) - July 15, 2011
• (**) ....... Amazon Takes On California, by Matt Richtel and Verne G. Kopytoff (New York Times) - July 14, 2011
• (***) ..... Goodbye to the harlot's prerogative, by Philip Stephens (Financial Times) - July 15, 2011
• (****) ... Leading the Wall Street Lobby, by Ben Protess (New York Times) - July 15, 2011
• (*****) . A Day of Apologies for the Murdochs, And of New Questions for Cameron, by John F. Burns (Financial Times) - July 17, 2011
• (1) for the record, Ms Rebekah Brooks resigned as head of News International on July 15, 2011 and was formally arrested two days after
• (2) see Libel law in Britain in the wikipedia