To buy or not to buy turns out to have been the question of the century in America--Just Do It or Just Say No. And in the past fifteen years, consumer society has moved to the center of historical inquiry as well. It began with the social history of commercial culture and the advertising industry, in books such as Kathy Peiss's Cheap Amusements: Working Women and Leisure in Turn-of-the-Century New York (1986) and Roland Marchand's Advertising the American Dream (1985). Drawing inspiration from the pioneering anthropological explorations of Dick Hebdidge (Subculture, The Meaning of Style, 1979), Arjun Appadurai (The Social Life of Things, 1988) and, especially, Mary Douglas and Baron Isherwood (The World of Goods, 1979), investigators then turned to the cultural history of how ordinary people use and assign meanings to commodities. A good example of this genre is Alison Clarke's Tupperware: The Promise of Plastic in 1950s America (1999). In recent works--such as Robert Collins's More: The Politics of Economic Growth in Postwar America (2000) and Alan Brinkley's The End of Reform: New Deal Liberalism in Recession and War (1995)--they have studied the political history of how nation-states promote and foster particular regimes of consumption. Where once consumption was deemed relevant only to the history of popular culture, in other words, it is now seen as intertwined with the central themes of American history, touching as it does on economics, politics, race relations, gender, the environment and other important topics.
Gary Cross, a professor at Penn State University and a pioneering and prolific historian of Europe and America, has explored the social, cultural and political dimensions of consumption before. In the past decade, he has published a half-dozen books on topics ranging from the history of leisure and working-class commercial amusements to the material culture of children's toys. Cross may study leisure, but his scholarship suggests that he doesn't take a whole lot of time to participate in consumer society. Fortunately, his work ethic has enabled the rest of us to understand our consumer ethic with clarity and historical perspective. Indeed, An All-Consuming Century displaces Daniel Horowitz's still-impressive but less wide-ranging The Morality of Spending (1985) as the best survey yet written of the history of modern American consumer society. Much more than a summary of recent scholarship (although it performs this task admirably), it is an informed, balanced, thoughtful and surprisingly passionate meditation on the making and meaning of our society. Avoiding the extremes of celebration and condemnation that too often pass for analysis, Cross's searching book is imbued with a generous concern for the revival of an active, democratic and participatory public sphere.
According to Cross, a paradox lies at the heart of American consumer society: It has been both an ideological triumph and a triumph over politics. Although it may be "difficult for Americans to see consumerism as an ideology," this is, Cross argues, precisely how it functions. It is, in his words, the "ism that won," the quiet but decisive victor in a century of ideological warfare. Over the course of the twentieth century it became naturalized to such an extent that few citizens "consider any serious alternatives or modifications to it."
In describing this ideological victory, Cross eschews conspiratorial interpretations of advertising and business collusion and gives consumer society its due for concretely expressing "the cardinal political ideals of the century--liberty and democracy--and with relatively little self-destructive behavior or personal humiliation." It won, Cross believes, because in large measure it met people's basic needs, helped them to fit into a diverse society even as it enabled them to forge new understandings of personal freedom, and served to fulfill, rather than mock, people's desire for the pleasures of the material world.
In spite of its popularity and successes, Cross believes that the ascension of consumer society has come at great cost: the abrogation of public life in favor of private thrills. By valorizing the private over the public and the present over the past and future, consumer society has "allowed little space for social conscience" and truly democratic politics. Rather than shoring up civil society, consumerism has pretty much replaced it: "The very idea of the primacy of political life has receded" as individual acquisition and use of goods has become the predominant way that Americans--and, increasingly, the rest of the industrialized world--make meaning of their lives. The suggestion that there should be limits to commercialism--that there are sacred places where the market does not belong--is, according to Cross, no longer taken seriously in a society that equates commercialism with freedom. Moreover, by the end of the century, "there seemed to be no moral equivalent to the world of consumption." The politics of consumption, in Cross's view, makes alternative conceptions of the good life virtually unimaginable in large part because it encourages people to think about themselves in isolation from the rest of society and from their history. (Reading Cross's book, I was reminded of Edward Hopper's painting Nighthawks, in which a customer at an urban diner sits alone, utterly disconnected from the humanity that surrounds him.) If Cross ultimately loses sight of the paradoxical nature of American consumerism and concludes on this dark note, An All-Consuming Century nonetheless provides important resources for others to explore the democratic potential of consumer society.
The narrative unfolds both chronologically and analytically. Cross divides the development of modern consumer society into four periods: 1900-1930, 1930-1960, 1960-1980 and 1980 to the end of the century. In this breakdown, the first three decades of the century were a takeoff period, during which a number of crucial elements converged to make America a consumer society. Cross consistently overstates the degree to which nineteenth-century America was a "traditional" society, untainted by commercialism; many elements of consumer society were born in the market revolution of the early 1800s and the corporate revolution of the later nineteenth century. But he is right to single out important developments that transformed the country from what we might call a nineteenth-century society with consumerist features to a full-blown consumer society in the twentieth century. The keys were increases in leisure time and personal income on the demand side, along with new products and innovations in selling on the supply side.
New, nationally advertised, branded products became widely available and affordable after the turn of the century. These products alleviated material needs, but more than that, Cross astutely notes, they became markers of new feelings of "comfort and ease" and "new sensations of power and speed." Modern products like cigarettes, candy and soft drinks made the sensational available on a daily, indeed almost hourly, basis. Amusement parks like Coney Island and other "cheap amusements" also made the regular purchase of spectacular thrills affordable for working people. In the consumer society, the utilitarian was always mixed with the sensual. The embodiment of this mixture was, of course, the great symbol of early-twentieth-century consumer society, the automobile. Already characterized by an increasing number of what Cross calls "private pleasures," in this period, as he shows, mass culture contributed to political and social changes as well: It blurred ethnic and class divisions and encouraged the children of immigrants to redefine themselves as members of a blended, multiethnic, if still racially segregated, youth culture.
The period 1930-1960 was one of consolidation in time of crisis. The constraints of the Great Depression and World War II led to a "frustrated consumerism more than a rejection of the capitalist system." Rather than blame the new consumerism, most policy-makers and indeed many ordinary Americans came to see "underconsumption" as the root cause of the slump. After the war, government policy encouraged the development of mass purchasing power rather than efforts to equalize the distribution of wealth. During the cold war, consumer society became "a positive answer to communism." In his 1959 "kitchen debate" with Nikita Khrushchev, Vice President Richard Nixon drove this point home by contrasting modern American appliances with outdated Soviet culinary technology. Despite the linkage in these years between consumption and freedom, Cross notes that the consumerism of the postwar years was not hedonistic but "domesticated," focused on the suburban home and the nuclear family. Signature developments of these years were Levittown, McDonald's and Holiday Inn, sites of responsible, respectable, family-oriented consumption.
From 1960 to 1980 consumer society faced a very different set of challenges but emerged stronger than ever. First, the counterculture challenged the very premises of consumerism, and in the 1970s, the specter of scarcity called into question the permanence of the cornucopia upon which consumer society depended. In spite of these challenges, "consumption became even more ubiquitous." Indeed, Cross suggests, the roots of the even more individualistic and socially fragmenting consumerism of the late twentieth century lay in part in the 1960s critique of consumerism: While countercultural figures critiqued conformity and idealized the "authentic self," many Americans sought to achieve this authenticity through consumption. Businesses began to modify the Fordist practice of mass production in favor of flexible production and segmented, demographically distinct markets. Drawing on the work of cultural critic Thomas Frank (rendered throughout the book as "Frank Thomas"), Cross writes that consumerism became "adaptable to the green and the hip." Similarly, during the energy crisis of the 1970s those politicians who took the shortage to be the result of overproductionwere rebuked as naysayers. With great political success, Ronald Reagan attacked President Jimmy Carter for a speech in which Carter had the temerity to suggest that "owning things and consuming things does not satisfy our longing for meaning." Reagan called that 1979 "malaise" address un-American in its pessimism and its call for restraint.
The trend toward fragmented, individualistic consumption accelerated during the last two decades of the century, an era that Cross labels "markets triumphant." Radical faith in the virtues of the market led politicians like Reagan to put a moral gloss on the "unfettered growth of market culture in the 1980s." Government constraints of an earlier era, in the form of environmental and advertising regulation, weakened, and commerce entered unfettered into areas where it had previously been kept at arm's length: children's homes and classrooms. By century's end the "Victorian notion that some time and place should be free from commerce" seemed as quaint as a Currier and Ives lithograph. Cross, who has a knack for unearthing telling statistics, notes that "supermarkets carried about 30,000 different products in 1996, up from 17,500 in 1986 and about 9,000 in the mid-1970s." Even the all-time-high consumer debt--$1.25 trillion by 1997--did nothing to stop the belief that the future of American prosperity and freedom depended upon the continuing expansion of the realm of consumption. Indeed, shopping had become the nation's primary form of entertainment, and monuments to consumption like the gargantuan 4.2-million-square-foot Mall of America became a haven for tourists from around the world.
In Cross's telling, the attractions and problems of consumer society are in effect one and the same: the cult of the new, immediate gratification and the valorization of "private pleasures." Consumerism is the "ism that won," owing to its ability not only to withstand challenges but, through a magical jujitsu, to co-opt them. Although initially formulated in terms neither celebratory nor condemnatory, Cross's story is ultimately one of declension. While he avoids the nostalgia of many commentators, there is little doubt that Cross finds contemporary consumer society to be a negative force: asocial, apolitical, amoral and environmentally dangerous. Whereas consumerism once helped integrate the diverse inhabitants of an immigrant nation in a youthful mass culture, by century's close, cynical marketers were happy to divide an equally multicultural nation into segmented demographic units based on "multiple and changing lifestyles." Thus the shift from an integrative, public-spirited popular culture in the early twentieth century to an increasingly privatized, solipsistic commercial culture of the late twentieth century. What was seductive in 1900--cornucopia and pleasure for the masses--became obscene by 2000, as a cultural stimulant turned into a dangerous narcotic.
An All-Consuming Century is one of the few indispensable works in the ever-expanding library of books on American consumer society. But in an otherwise rich overview the author has surprisingly little to say about the role of women, African-Americans and ethnic minorities (and nothing about regional variations) in the construction of consumer society. These are serious omissions. As admen and women's organizations recognized early on, women have performed the vast majority of the unpaid labor of consumer society: the shopping, budgeting and refashioning of older items. Cross notes that African-Americans were excluded from many of the benefits of the emerging mass culture, but he does not address the ways popular culture served to reinforce both the whiteness of the "new immigrants" from Eastern and Southern Europe--a skin privilege that was not yet fully acknowledged by the majority culture--and the otherness of Asian and Latino immigrants.
Nor does Cross discuss the attractions of nationwide retailers and national brands for African-Americans, who often took advantage of what the historian Edward Ayers has called the "anonymity and autonomy" made possible by the advent of the Sears catalogue (and chain stores in the nonsegregated North), whose mass customer base and "one price" system reduced the possibilities for racial discrimination that frequently accompanied visits to the corner store. For this group, the private pleasures occasionally afforded by the advent of national markets offered advantages over the public humiliations that so often accompanied local commerce.
Cross's relative neglect of women and minorities leads him to underestimate the importance of grassroots consumer activism as well, which has often been led by members of these groups. Meat boycotts, cost-of-living protests, "don't buy where you can't work" campaigns and sit-ins were integral to the development of American consumer society because they represented demands to expand the benefits of consumerism beyond a middle-class elite. One of the most important women's political organizations of the first half of the century, the National Consumers League, which pioneered the crusade for "ethical consumption" and labor rights, goes unmentioned. Cross stresses the ways marketers attempted to co-opt the civil rights movement, but he does not address the degree to which the demand for full participation in consumer society was a key ingredient in that crusade for social justice. By virtually ignoring these movements, Cross leaves out an important part of the story of consumer society--efforts to unite citizenship with consumption.
The critics of consumer society whom Cross discusses most often are proponents of what he calls the "jeremiad," the high-culture dismissal of mass culture as vulgar. He condemns the elitism and arrogance of such thinkers and is surely correct to note that their criticism had little impact on ordinary shoppers. Cross is less critical of the "simple living" tradition and calls the self-provisioning movement of the 1960s "the most positive aspect" of the counterculture. He argues that "the idea of the 'simple life,' perhaps never more than a daydream, had almost ceased being even a prick to the conscience," but he only briefly mentions the growing popularity of the "voluntary simplicity" movement, a topic addressed in more detail in Juliet Schor's The Overspent American (1998).
Cross also develops a persuasive critique of the consumer rights movement. While the Depression era saw the rise of groups like Consumers Union, which sought to make consumers a greater force against the power of business and advertisers, he notes that by focusing primarily on product quality and prices, many consumer rights groups have served only to reinforce "the individualism and the materialism of American consumption." This tradition of angry but apolitical individualism can still be found at innumerable websites, like starbucked.com, that highlight at great length the indignation of formerly loyal customers: "The sales clerk who sold me the machine was rude, then decidedly refused to hand over the free half pound of coffee given with every purchase of a Starbucks espresso machine...." The democratizing power of consumer demands for corporate responsibility is too often dissipated by such narrowly cast diatribes.
In spite of the failure of the jeremiad, the seeming irrelevance of simplicity and the individualization of the concept of consumer rights, Cross is too definitive about the nature of the "victory" of consumer society. Many Americans still recognize that however much advertisers and marketers attempt to cover it up, consumption is fundamentally a social and political act. So although it is true that "late twentieth century consumerism turned social problems into individual purchasing decisions," it is also the case that individual shopping decisions have frequently been viewed in the context of social problems. As consumer activists from the League of Women Shoppers in the 1930s through environmentalists today have pointed out, the goods that we buy leave ecological, labor and government "footprints." In spite of corporate attempts to fetishize goods, diligent activists like John C. Ryan and Alan Thein Durning of Northwest Environment Watch have described--and tried to estimate--the hidden social costs incurred by the purchase of quotidian products, including coffee and newspapers. The actions of students in the antisweatshop campaigns of recent years indicate that a growing number of consumers are looking behind the logo to determine the conditions under which the clothing they buy is made. As Naomi Klein has recently argued in No Logo:Taking Aim at the Brand Bullies, the ubiquity and importance of brands provides an opening for protesters who can threaten, through consumer boycotts and other actions, to sully corporate America's most valuable asset, the brand name. One teen in Klein's book puts it this way: "Nike, we made you. We can break you." Cross may decry the "inwardness of the personal computer," but the protests at the Seattle World Trade Organization and Washington International Monetary Fund meetings reveal that the Web creates alliances and expands social bonds. The history of consumer activism--and its recent incarnations--shows that consumerism does not necessarily lead to an antipolitics of radical individualism.
Cross does put forth important arguments about the "excesses of consumer culture": the environmental degradation, the waste, the lack of free time and the sheer mind-numbing meaninglessness that accompany modern consumerism. But these must be balanced with the recognition that most Americans, especially those in the working class, have viewed the enjoyment of the fruits of consumer society as an entitlement, not a defeat. This should not be dismissed as false consciousness or "embourgeoisement." Far from allowing consumerist demands to erode political impulses, working people--through living-wage, union-label and shorter-hour campaigns--have consistently politicized consumption. Rather than pitting the culture of consumption against democracy, it will be important to continue this tradition of democratizing, rather than demonizing, the culture of consumption. In his assessment of the twentieth century's most influential "ism," Cross provides important warnings about the difficulties of such an effort. But in its stress on the paradoxes of consumer society--an emphasis that then too rapidly gives way to condemnation--An All-Consuming Century also provides lessons from history about the necessity of the undertaking.
Bill Gates for President--next time. Now that we've gotten used to
millionaires running for the presidency, why not a billionaire and a
self-made one at that? At least Gates is aware that the biggest problem
in the world is not how to make some Americans even wealthier but how to
deal with the abysmal poverty that defines the condition of two-thirds of
Odd as it may seem, it took the richest man in the world in a dramatic
speech last week to remind us that no man is an island, and that when
most of the world's population lives on the edge of extinction, it mocks
the rosy predictions for our common future on a wired planet.
Gates shocked a conference of computer industry wizards with the news
that the billions of people who subsist on a dollar a day are not in a
position to benefit from the Information Age. He charged that the hoopla
over the digital revolution, which he pioneered, is now a dangerous
distraction from the urgent need to deal seriously with the festering
problem of world poverty. Gates, who has donated an enormous amount to
charity, also made the case that private donations alone will not solve
the problem, and that massive government intervention is needed.
"Do people have a clear idea of what it is to live on $1 a day?" Gates
asked the conferees. "There's no electricity in that house. None. You're
just buying food, you're trying to stay alive."
The "Creating Digital Dividends" conference he addressed was one of
those occasions in which the computer industry indulges the hope that as
it earns enormous profits, it is solving the major problems facing
humanity. The premise of the conference was that "market drivers" could
be used "to bring the benefits of connectivity and participation in the
e-economy to all the world's 6 billion people."
As reported by Sam Howe Verhovek in the New York Times, Gates, who was
the conference's closing speaker, doused that hope by denying that the
poor would become part of the wired world any time soon. In a follow-up
interview, Gates amplified his view of what occurs when computers are
suddenly donated to the poor: "The mothers are going to walk right up to
that computer and say, 'My children are dying, what can you do?' They're
not going to sit there and like, browse eBay."
Gates, who has long extolled the power of computers to solve the
world's problems, criticized himself for having been "naïve--very naïve."
He has shifted the focus of the $21 billion Bill and Melinda Gates
Foundation from that of donating Information Age technology to meeting
the health needs of the poorest, beginning with the widespread
distribution of vaccines.
The New York Times reported that Gates "has lost much of the faith he
once had that global capitalism would prove capable of solving the most
immediate catastrophes facing the world's poorest people, especially the
40,000 deaths a day from preventable diseases. He added that more
philanthropy and more government aid--especially a greater contribution
to foreign health programs by American taxpayers--are needed for that."
Given that Gates is presumably the biggest of those taxpayers, that is
the most provocative challenge to the complacency of the
"free-markets-and-trade-will-solve-everything" ideology that dominates
the thinking of both major parties. US foreign aid to the poor
represents a pathetic fraction of our budget, while we devote ever larger
sums to building a sophisticated military without a sophisticated enemy
in sight. Yet those misplaced priorities went totally unchallenged by the
presidential candidates of both major parties.
Poverty is the major security problem both within and without our
country. These days the have-nots have many windows to the haves, and
resentment is inevitable. It is the breeding ground of disorder and
terror, and it is absurd to think that a stable new world order can be
built on such an uneven foundation.
One of the ironies of the wired world is that those terrorists in
their remote mountain camps are wired into the Internet, which has
facilitated the coordination of their evil plans. The terrorists have all
the laptops and cellular phones they want, but they depend for their
effectiveness on recruiting from the ranks of the alienated poor who
don't have medicines, food or a safe source of water.
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.