Sunday, November 29, 2015

A resurrected debate with the same old dead language

Australian economist John Quiggin published a prize-winning book  in 2012 called Zombie Economics.

He was referring to old, long discredited economic ideas and proscriptions that keep being touted by so-called experts as relevant and meaningful today. They're impossible to kill off once and for all despite convincing evidence that they're actually DEAD.

I was reminded of this last week when the government unleashed yet another iteration of our local book trade's tiresome debate about our Parallel Importation Restrictions (PIRs), a debate that's being going on now for twenty-five years.

The overwhelming majority of industry commentators remain absolutely aghast at the prospect that these provisions could be abolished. The week ended yesterday with the release of the open letter to the prime minister from Booker winning authors Tom Keneally, Peter Carey and Richard Flanagan, which I'll examine in a minute.

But the week started as it finished. The language resurrected and flung around was as colourful as ever. Words like 'flooded' (by trashy American books), 'dumped' (foreign overstocks), 'swamped' (by foreign remainders of Australian originals), 'degraded' (copyright), 'worthless' (Australian rights), 'decimate' (the industry), 'colony' (back to), 'vandalism' (ideological), 'laid waste' (culture). The list goes on.

I was also reminded of Tony Abbott's campaign against the carbon tax. Remember 'Whyalla' (disappearance), '$100 lamb roasts' (every Sunday), 'massive electricity price increases' (tripling)?

All of these outpourings of course are unmitigated economic tripe. To use my own colourful language, they exhibit a toxic mix of ignorance, delusion and hysteria.

The Keneally, Carey and Flanagan letter is full of it too:

The commercial underpinning of the Australian publishing industry that sustains this writing is the protection of writers' copyright in the form it exists in almost every country in the world.

The recent announcement by your government that it will end restrictions on parallel importation on books will extinguish that protection.

The consequences will be job losses, public revenue loss as profits are transferred overseas, and a brutal reduction in the range of Australian books publishers will be able to publish. Australia will become, as it was in the 1960s, a dumping ground for American and English books, and we will risk becoming — as we once were — a colony of the minds of others.

Notice the sleight of hand: the basic 'protection of writers' copyright' will be extinguished by ending the PIRs. Then the awful apocalyptic consequences. And, yes, the mindless refrain: 'Territorial copyright' will be extinguished.

Not one piece of this dreaded scenario is remotely realistic. It's a combination of conceptual confusion, profound ignorance of common industry dynamics, and rhetorical mischief. Shameful, in fact.

They go on to claim that the Australian book industry 'is not a government subsidised or protected industry'. It's not government subsidised in the main, but it is certainly protected. The PIRs have done that for more than 100 years. They have protected importing publishers from the chill winds of competition and have cosseted an industry that in critical ways has remained dozy, unresponsive and anti-consumer for far too long.

The letter concludes with another zombie claim:

These rules and rights are what allowed us and so many other Australians to become published writers. These rules and rights are what enabled a golden age of Australian writing to occur. And it is our hope that this time of great literary achievement is an early chapter in the ever growing story of Australian literature, and not — if this decision stands — the end. We cannot return to being a colony of the mind.

The PIRs have had nothing to do with the well deserved success of Australian authors, the golden age of Australian writing, or our great literary achievements, and their long overdue removal will not impede in any way, shape or form the ever growing story of Australian literature. It's absurd to claim we will return to being 'a colony of the mind'. 

One sentence in the letter, however, is completely true:

The argument that books will become cheaper if the rules are changed ignores the fact that books have become cheaper within the existing rules because of market forces.

When the dollar significantly strengthened in the years 2009 to 2013 and competition for the consumer dollar from Amazon and The Book Depository became an irresistible force, publishers were finally forced to wake up and respond by lowering their prices. (I wrote about this last year here). That's sort of what competition does. 

The Harper Competition Review and the government got this wrong when they claimed book prices would significantly decrease once the provisions were repealed. If they had been removed in 2009 when they should have been by the gutless Rudd government, the price reduction effect would have been swift and the 30% loss in sales the industry suffered greatly mitigated.

Finally, one thing the Keneally, Carey, Flanagan letter shows to full and powerful effect is that this debate will be won, as it always has in the past, by celebrity authors. There is no way the Turnbull government will abolish the PIRs with such articulate opposition from beloved public figures with instant access to every media platform. And especially now, when no claim that Australians will suddenly enjoy lower book prices will be taken seriously. 

The mistake governments have repeatedly made, and are making again, is to give the brief to the Productivity Commission to examine the issue and to recommend 'transitional arrangements'. This prolongs the debate and demands extensive industry consultation (which invariably descends into industry condemnation). The only way this reform is every going to get up is for some future, smarter  government to shove the legislation, after securing bipartisan support, into parliament late on a Tuesday night and announce it on Wednesday morning.

(A final point: The remainders issue - foreign versions of Australian originals - has always been the key one in terms of risk. The prices are so low the going exchange rate and the RRP of the Australian edition don't factor in the equation. The issue is should we structure our entire industry patterns around the possibility, even the strong possibility of these remainders coming occasionally to our shores. After all, only a small percentage of these overseas editions are remaindered in any significant volume, and a tiny percentage of Australian retailers or distributors would stoop so low as to import them. No regular bookseller would do it as they do business with integrity and in any case would not risk being ostracised by publishers they rely on.

Nevertheless, to rid the industry of the possibility, the best solution would be to introduce specific provisions disallowing re-importation. The US book industry, where re-importation is of far greater significance than importation (which is entirely a non-issue), is currently lobbying Congress to legislate to that effect after the Supreme Court judged in 2013 that re-importation was currently legal.

The problem with this solution is that it would most probably be contrary to the Berne Convention to which Australia is a signatory. Berne disallows countries from privileging their own books. All member countries' copyrighted products must be treated equally. 

The only feasible option therefore may be our anti-dumping regulations. Publishers could apply to the Anti-Dumping Commission to have a duty applied to imported remainders which would make their prices at retail level equivalent to the local editions).