News and Features
In the final triumph of free-market capitalism, farmers will become serfs.
If you are the parent of a newborn, beware. Fourteen to eighteen months from now your child will be programmed to nag for a new toy or snack every four hours, "branded for life" as a Cheerios eater or a Coca-Cola guzzler and placed in the loving care of a market researcher at the local daycare center.
That, at least, was the view of early childhood development presented by the 400 children's-market honchos at the third annual Advertising & Promoting to Kids Conference, held in New York City on September 13-14. Conference-goers attended sessions on topics like Building Brand Recognition, Marketing in the Classroom and The Fine Art of Nagging ("40% of sales of jeans, burgers and other products occur because a child asks for the product"). They cheered winners of the Golden Marble Awards for best breakfast-food and video-game commercials.
The marketing confab was held as the government released a report documenting the growing commercialization of public schools and also as the Federal Trade Commission blasted media companies and the advertising industry for deliberately marketing violent films and products to children. Although kids have been targets of marketing for decades, the sheer amount of advertising they are exposed to today is "staggering and emotionally harmful," says Susan Linn, a Harvard Medical School psychologist who studies media at the Judge Baker Children's Center in Boston. Linn and other child psychologists, educators and healthcare professionals led a protest outside the Golden Marble Awards to draw attention to the effects of the $12-billion-a-year kid-ad industry, including the epidemic of obesity in children and increasing violence in schools. "It's appalling that creativity is being rewarded in the service of manipulating children," Linn says. "We hope this is the beginning of a national movement to challenge this."
In fact, this fall has been a good one for grassroots opponents of corporate commercialism. The Madison, Wisconsin, school board voted in August to terminate its exclusive beverage contract with Coca-Cola, making it the first school district in the country to cancel an existing marketing deal [see Manning, "Students for Sale: How Corporations Are Buying Their Way Into America's Classrooms," September 27, 1999]. The board cited "overwhelming public opposition" as the reason for its decision. That action came hard on the heels of successful campaigns to stop proposed school-marketing deals in Oakland and Sacramento, California; Philadelphia; and the state of Michigan, where a cola contract involving 110 school districts was shot down. In October the American Dental Association passed a resolution urging its members to oppose the marketing of soft drinks and junk food in schools, and the American Psychological Association, under pressure from many of its members, agreed to form a task force to examine whether it is unethical for psychologists to advise companies that market to children. Meanwhile, ZapMe!, the in-school marketing company, abandoned its educational business after failing to convince enough schools to accept its offer of free computers in exchange for delivering student eyeballs to advertisers.
"We're seeing a dramatic increase in local resistance to all forms of corporate marketing to kids," says Andrew Hagelshaw, executive director of the Center for Commercial-Free Public Education, in Oakland. "The issue has finally hit critical mass with the public." Hillary Rodham Clinton has jumped on the bandwagon. Citing a "barrage of materialistic marketing" aimed at young children, the Democratic candidate for senator from New York wants the government to ban commercials aimed at preschool children and to prohibit advertising inside public elementary schools. Anticorporate activists welcomed Clinton's proposals but said they don't go far enough. Opponents of a New York City school board plan to finance free laptop computers for students through in-school advertising say her proposals won't protect millions of high school students. Nor would the proposals apparently affect the commercial in-school TV program Channel One, whose market is primarily middle school students.
Corporate lobbyists are already putting the heat on members of Congress who might support legislation reining in children's advertising. Hagelshaw believes the real battles will take place in local school boards and state legislatures, which may be more receptive to anticommercial arguments. There's never been a better, or more important, time for local activists to step up the pressure on corporate exploiters of children.
One of the most remarkable--but unremarked, other than superficially--aspects of globalism is its erosional effect on the role of the state as we've known it since the 1648 Peace of Westphalia. Indeed, as Nation editorial board member Richard Falk notes in opening Human Rights Horizons, "The sovereign state is changing course due primarily to the widespread adoption of neoliberal approaches to governmental function.... There exists a broad cumulative trend toward the social disempowerment of the state," and "market forces operate as an impersonal agency for the infliction of human wrongs." Advancing their cause despite the privatizing of government functions--the ultimate in deregulation--may be "the most pressing framing question for human rights activists," Falk asserts in this scholarly meditation.
Falk moves between the specific and the general, whether geographically (from Rwanda to Kosovo to the Gulf War) or institutionally (the UN, NATO, World Bank, IMF), to try to tease out the foundations and implications of a new world moral order. He eschews easy answers--"it remains premature at this point to set forth 'the lessons of Kosovo'"--and is skeptical, yet he presents signs of hope: Global media provide "vivid images...of popular activism and makes the struggles in one setting suggestive...in another," for instance, and in one of its dynamics, globalization "is creating a stronger sense of shared destiny among the diverse peoples of the world."
In the more trying period ahead, a modest internationalism would fare best.
Activists are finding success solving social problems on a regional basis.
If politics got real...the debate over costly prescription drugs would turn to more fundamental solutions like breaking up the pharmaceutical industry's patent monopolies, which generate soaring drug prices, and rewarding consumers for the billions of tax dollars spent to develop new medicines. As a business proposition, that sounds radical, but it would actually eliminate outrageous profit-skimming at taxpayers' expense and liberate lifesaving medicines from inflated prices so millions of people worldwide could afford the health benefits.
At present, the government picks up the bill for nearly all basic research and development, mainly through the National Institutes of Health. Then private industry spends about $25 billion a year on more R&D--essentially taking NIH discoveries the rest of the way to market. The companies mostly do the clinical testing of new compounds for safety and effectiveness, then win regulatory approval for the new applications. This is one instance where a bigger role for government, by taking charge of the scandalous pricing system, could produce vast savings for the public--as much as $50 billion to $75 billion a year.
The National Institutes of Health and independent scientists working with NIH grants generally do the hard part and take the biggest risks, yet there is no system for sharing the drug companies' subsequent profits with the public treasury or for setting moderate prices that don't gouge consumers. Instead, the drug industry reaps revenues of $106 billion a year, claiming that it needs its extraordinary profit levels in order to invest heavily in research. The companies are granted exclusive patents on new products for seventeen years (or longer if drug-company lobbyists persuade Congress to extend them). Meanwhile, the manufacturers collect royalties (and less profit) on the very same drugs under licensing agreements with Europe, Canada and other advanced nations where the governments do impose price limits. Thus, Americans pay the inflated prices for new medicines their own tax dollars helped to discover--while foreign consumers get the break.
Years ago, although reform was mandated by law, NIH abandoned its efforts to work out a system for moderating US drug prices--mainly because the industry refused to cooperate and had the muscle in Congress to get away with it. Now that soaring prices have inflamed public opinion again, Dean Baker of the Center for Economic and Policy Research proposes a more radical solution. NIH should be given control over all drug-research policy, Baker suggests, and Congress should put up public money to cover the industry's spending (probably less than $25 billion because marketing costs get mixed into the research budgets as well as money spent to develop copycat drugs, which are medically unimportant). The exclusive patent system would be phased out, perhaps starting with cancer drugs and other desperately needed medicines whose prices are too high for poor nations to afford. For $25 billion or less in new public spending, brand-name drugs would largely disappear, but, Baker estimates, prescription costs for Americans would shrink by as much as 75 percent overall.
A less drastic solution, suggested by James Love of Ralph Nader's Consumer Project on Technology, would limit use of exclusive patent rights and, if needed, compel drug-makers to grant royalty licenses to other US companies to make and sell the same medicines, thus fostering price competition. Competing companies would be required to contribute a minimum percentage of revenues to R&D to maintain research spending levels. The government could also require companies to help fund government or university research.
The prescription-drug debate of Election 2000 is a long way from either of these visions for reform, but events may lead the public to take them seriously. Drug prices are inflating enormously. If Congress fails to make it legal, the bootlegging of cheaper medicines from Canada and other countries where the prices are controlled is bound to escalate, and the present system might break down from its own lopsided design. As a matter of public values, the discovery of new health-enhancing medicines ought to be shared as widely--and inexpensively--as possible, especially since public money helped pave the way to these discoveries. Jonas Salk never sought to patent his polio vaccine. He thought his reward was knowing how greatly his work had advanced all of humanity.
Who says this is a do-nothing Congress? Sure, it can't agree on expanding the childcare tax credit or approve an increase in the minimum wage. Yet, as Congress prepares to adjourn, legislators were rushing to protect and expand tax subsidies for some of the largest, most profitable corporations in the world. Under current law, US exporters can set up largely paper presences in foreign tax havens like Barbados. The exporters can then exempt between 15 and 30 percent of their export income from taxes by routing products through these entities, called Foreign Sales Corporations. In a recent case filed by the European Union, however, the World Trade Organization ruled that the FSC tax break was an illegal subsidy.
Precedent has shown the United States more than willing to bend to the will of the WTO. For example, when the WTO ruled against an Endangered Species Act protecting sea turtles, the United States quickly eased its regulations. Yet when a multibillion-dollar tax incentive is at stake, Washington falls all over itself to protect corporate welfare.
Immediately after the WTO ruling against FSCs, the Clinton Administration, a few members of Congress and the business community began meeting in secret to work out a bill that eliminates FSC in name only while actually expanding export subsidies for a total cost to taxpayers of about $4 billion a year. The beneficiaries? General Electric, Boeing, Raytheon, Cisco Systems, Archer Daniels Midland and others. The House approved this bill with only forty minutes of debate and no amendments allowed, by a vote of 315 to 109. The bill was held up in the Senate because some objected to the tax break for arms manufacturers and subsidies for tobacco exports. Despite the objections, the bill is expected to be tacked onto a must-pass budget bill and signed by the President.
The proponents of this giveaway claim it will promote US jobs. However, the Congressional Budget Office, whose director was appointed by Republicans, has written, "Export subsidies do not increase the overall level of domestic investment and domestic employment.... In the long run, export subsidies increase imports as much as exports." The nonpartisan Congressional Research Service reached a similar conclusion.
It gets worse. The tax break may actually subsidize moving US jobs overseas. There is no requirement that a substantial portion of a product covered by the subsidies be made with US content or with US labor. An Administration official said that an eligible product could have "little or no US content" and still qualify.
Not only is the legislation not economically justifiable, it is not likely to comply with the WTO ruling. The EU has already stated that the changes aren't adequate, and it intends to seek authority to retaliate by imposing 100 percent tariffs on some $4 billion worth of US goods.
I am not a fan of the WTO. It is an unaccountable, secretive, undemocratic bureaucracy that looks out for the interests of multinational corporations and investors at the expense of human rights, labor standards, national sovereignty and the environment. But by pointing out that export subsidies like FSCs are corporate welfare, the WTO has done US taxpayers a favor. It has once again highlighted the fact that US trade policy is written by and for corporations, with no concern for workers, human rights or environmental protection.
If Western Europe is to be independent it must defend its welfare state.
While the differences between George W. Bush and Al Gore may still be coming into focus for many Americans in the final weeks before the election, one is already stark. On tobacco, the leading cause of preventable death in America, Bush would return the nation to the failed laissez-faire attitudes of the past. A Gore administration could be expected to continue the course charted by President Clinton, the first truly anti-tobacco President.
Indeed, a Bush administration would solve so many of tobacco's problems that the Texan is virtually one-stop shopping for an industry that has drenched his campaign with cash. For one thing, he'd change the civil justice system. Clinton vetoed tort reform bills, but Bush has made such "reform" a keystone of his proposed social policy and points with pride to his record in Texas--in 1995 he placed draconian restrictions on the right to sue. Bush would help mitigate the fallout from the recent $145 billion verdict in the Engle lawsuit--the Miami class action on behalf of thousands of Floridians sickened by cigarettes--by signing a bill pending in Congress that would send all class actions to federal court. There, Engle would be decertified, downgraded into a handful of individual lawsuits, long before trial by a federal system hostile to tobacco class actions.
As to regulating cigarettes, Bush would likely work with a Republican Congress to enact a "compromise" regulation law, limiting some forms of tobacco marketing and granting toothless federal oversight in return for liability limits and giving tobacco a seat at the table of any regulatory process. Bill Clinton was the first President to make the regulation of tobacco one of his signature policy initiatives. Although the Supreme Court ultimately shot down Food and Drug Administration oversight of cigarettes, Clinton used the bully pulpit of the presidency to put tobacco on the national agenda in a way it had never been before, fulminating against the industry for peddling nicotine to children.
Bush's record indicates he would pay lip service to keeping kids off cigarettes but would put much more energy into vilifying plaintiffs' lawyers for getting rich from lawsuits that attack the industry for targeting children. Bush has pledged to kill off a multibillion-dollar RICO action by the Justice Department that charges that the cigarette companies concealed their product's deadliness, and he would likely rescind or stymie numerous Clinton executive orders, nascent regulations and programs dealing with everything from secondhand smoke to funding research on Big Tobacco's internal documents.
Finally, Bush would be likely to back incursions by domestic cigarette makers into foreign markets. He would be much less disposed to sign on to a proposed World Health Organization treaty on tobacco and health and very prone to weaken it, to the benefit of a global tobacco industry now menacing Asia, and to the detriment of millions of potential new smokers who will become victims of cigarette-related disease.
It offers a blatant apologia for economic inequality--but few question the faith.