Author: Frank Pasquale

Leading the World with Free Trade

As debate heats up on the Trans-Pacific Partnership trade deal, journalists should keep a few key points in mind. First, the deal is in essence deregulatory, shifting enormous power to multinational corporations to challenge basic legal protections of consumers and citizens. Second, the US has a history of using its power in the global trading system to promote fundamentally unsafe products and services to other nations. Consider this snippet from a story on lead paint:

By the 1920s, it was known that one common cause of childhood lead poisoning was the consumption of lead paint chips. . . . In 1922, the League of Nations proposed a worldwide lead paint ban, but at the time, the US was the largest lead producer in the world, and consumed 170,000 tons of white lead paint each year. The Lead Industries Association had grown into a powerful political force, and the pro-business, America-first Harding administration vetoed the ban. Products containing lead continued to be marketed to American families well into the 1970s, and by midcentury lead was everywhere: in plumbing and lighting fixtures, painted toys and cribs, the foil on candy wrappers, and even cake decorations. . . .

Lead paint was the most insidious danger of all because it can cause brain damage even if it isn’t peeling. Lead dust drifts off walls, year after year, even if you paint over it. It’s also almost impossible to get rid of. Removal of lead paint with electric sanders and torches creates clouds of dust that may rain down on the floor for months afterward, and many children have been poisoned during the process of lead paint removal itself. Even cleaning lead-painted walls with a rag can create enough dust to poison a child.

Of course, at this stage in the development of globalization, toxic financial products are a greater concern than toxic chemicals.  We’ve also advanced toward more subtle ways of assuring their proliferation. But the core mission of “free trade” law in this, as in so many areas, is relatively clear: to open yet another venue where corporations, far from being held accountable for their actions, can instead undermine crumbling extant legal protections for consumers.

“They Cannot Breathe:” Poisoned Workers in Nail Salons

The grim story of deregulation in the US economy has another victim: nail salon workers. A New York Times expose has won tremendous attention to their plight in an industry that has long resisted regulation:

Some states and municipalities recommend workers wear gloves and other protection, but salon owners usually discourage them from donning such unsightly gear. And even though officials overseeing workplace safety concede that federal standards on levels of chemicals that these workers can be exposed to need revision, nothing has been done. So manicurists continue to paint fingertips, swipe off polish and file down false nails, while absorbing chemicals that are potentially hazardous to their health. . . .

In interviews with over 125 nail salon workers, airway ailments . . . were ubiquitous. Many have learned to simply laugh them off — the nose that constantly bleeds, the throat that has ached every day since the manicurist started working.

For those interested in the legal background, I highly recommend a piece by my former student, Kelsey-Anne Fung. In 2014, she concluded:

Southeast and East Asian immigrant nail salon workers face disproportionate exposure levels to dangerous and carcinogenic nail products, and as a result, suffer severe health outcomes at unusually high rates. Without FDA authority of pre-market approval, testing, or recall, the cosmetic industry is wholly self–regulated, resulting in scarce protections to consumers and professions who use nail products on a daily basis. Salon owners often pay below minimum wage, do not provide health insurance or any benefits, and fail to supply adequate safety equipment. Consequently, workers must rely on community safety net clinics and public hospitals for medical care to treat ailments from working in the nail salon, paying steep out–of–pocket rates. On its own, the Patient Protection and Affordable Care Act does not remedy any of the health policy issues facing immigrant nail salon workers. Thus, [state-level interventions] may be the only viable solution to securing preventative and affordable health care services for this overburdened and vulnerable labor force.

Both Fung’s article, and the NYT piece, are must-reads for anyone concerned about the fate of workers in an increasingly deregulated environment.

 

 

 

Europe Steps Up to the Challenge of Digital Competition Law

Two years ago U.S. authorities abandoned a critical case in digital antitrust. The EC now appears ready to fill the void:

The European Commission is said to be planning to charge Google with using its dominant position in online search to favor the company’s own services over others, in what would be one of the biggest antitrust cases here since regulators went after Microsoft. . . . If Europe is successful in making its case, the American tech giant could face a huge fine and be forced to alter its business practices to give smaller competitors like Yelp greater prominence in its search queries.

I applaud this move. As I’ve argued in The Black Box Society, antitrust law flirts with irrelevance if it fails to grapple with the dominance of massive digital firms. Europe has no legal or moral obligation to allow global multinationals to control critical information sources. Someone needs to be able to “look under the hood” and understand what is going on when competitors of Google’s many acquired firms plunge in general Google search results.

Google argues that its vast database of information and queries reveals user intentions and thus makes its search services demonstrably better than those of its rivals. But in doing so, it neutralizes the magic charm it has used for years to fend off regulators. “Competition is one click away,” chant the Silicon Valley antitrust lawyers when someone calls out a behemoth firm for unfair or misleading business practices. It’s not so. Alternatives are demonstrably worse, and likely to remain so as long as the dominant firms’ self-reinforcing data advantage grows. If EU authorities address that dynamic, they’ll be doing the entire world a service.

PS: For those interested in further reading about competition online:
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New Podcast: The Week in Health Law (TWIHL)

Nicolas Terry and I are starting a health law podcast, The Week in Health Law, and the first two episodes are posted here. We were honored to have Nicole Huberfeld on as our first guest. Check it out on iTunes, Stitcher, or your favorite podcast app.

Next week we’ll be talking with Abigail Moncrieff the day after King v. Burwell oral arguments. Later guests this month include Lindsay F. Wiley (on wellness programs) and Erin C. Fuse Brown (on health costs).

Taking Human Capital Theory Seriously: Simkovic on “The Knowledge Tax”

Graduate professional education in the US is facing a financing squeeze. Some argue that those learning to become doctors, nurses, engineers, lawyers, and the like should get no help from the federal government, because they tend to earn higher incomes than average. Others question that premise, arguing that past results of grad degrees are no guarantee of future performance. They believe that an impending wave of defaults on federal student loans will raise the cost of federal credit programs.

Nevertheless, each side argues for policy with convergent outcomes. The “grad students will be rich” camp argues for curtailing federal loans, since they believe professionals can handle the higher interest rates on the private market. The “grad students will be poor” camp wants to raise the rates on federal student loans, to build up the already hefty surpluses the government is now making, to prepare for the putative future defaults. In the eyes of both, graduate students are the undeserving recipients of government largesse.

I’m not convinced by either: the “too rich” camp fails to value professional services properly, and the “too poor” camp is relying on controversial accounting techniques. But until I read Mike Simkovic’s recent paper “The Knowledge Tax,” I’d never thought of an even more fundamental distortion at work here: tax policy. Simkovic lays out the problem with characteristic clarity, considering a hypothetical college graduate deciding on (1) attending medical school and practicing medicine; or (2) purchasing a small vacant building and converting it into rental apartments:
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Meet the New Boss…

One of the most persistent self-images of Silicon Valley internet giants is a role as liberators, emancipators, “disintermediators” who’d finally free the creative class from the grips of oligopolistic music labels or duopolistic cable moguls. I chart the rise and fall of the plausibility of that narrative in Chapter 3 of my book. Cory Doctorow strikes another blow at it today:

[T]he competition for Youtube has all but vanished, meaning that they are now essential to any indie artist’s promotion strategy. And now that Youtube doesn’t have to compete with other services for access to artists’ materials, they have stopped offering attractive terms to indies — instead, they’ve become an arm of the big labels, who get to dictate the terms on which their indie competitors will have to do business.

Ah, but don’t worry–antitrust experts assure us that competition is just around the corner, any day now. Some nimble entrepreneur in a garage has the 1 to 3 million servers now deployed by Google, can miraculously access past data on organizing videos, and is just about to get all the current uploaders and viewers to switch to it. The folklore of digital capitalism is a dreamy affair.

The Second Machine Age & the System of Professions

Why do we have professions? Many economists give a public choice story: guilds of doctors, social workers, etc., monopolize a field by bribing legislators to keep everyone else out of the guild.* Some scholars of legal ethics buy into that story for our field, too.

But there is another, older explanation, based on the need for independent judgment and professional autonomy. Who knows whether a doctor employed by a drug company could resist the firm’s requirement that she prescribe its products off-label as often as possible. With independent doctors, there is at least some chance of pushback. Similarly, I’d be much more confident in the conclusions of a letter written by attorneys assessing the legality of a client’s course of action if that client generated, say, 1%, rather than 100%, of their business.

Andrew Abbott’s book The System of Professions makes those, and many other, critical points about the development of professions. Genuine expertise and independent judgment depend on certain economic arrangements. For Abbott, the professions exist, in part, to shield certain groups from the full force of economic demands that can be made by those with the most money or power. As inequality in the developed world skyrockets, and the superrich at the very top of the economy accumulate vastly more wealth than the vast majority of even the best-paid professionals, such protections become even more urgent.

I was reminded of Abbott’s views while reading Lilly Irani’s excellent review of Erik Brynjolffson & Andrew McAfee’s The Second Machine Age, and Simon Head’s Mindless. Irani, a former Googler, digs into the real conditions of work at leading firms of the digital economy. She observes that much of what we might consider “making” (pursuant to some professional standards) is a form of “managing:”
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Methodological Pluralism in Legal Scholarship

The place of the social science in law is constantly contested. Should more legal scholars retreat to pure doctrinalism, as Judge Harry Edwards suggests? Or is there a place for more engagement with other parts of the university? As we consider these questions, we might do well to take a bit more of a longue duree perspective–helpfully provided by David Bosworth in a recent essay in Raritan:

No society in history has more emphasized the social atom than ours. Yet the very authority we have invested in individualism is now being called into question by both the inner logic of our daily practices and by the recent findings of our social sciences. . . .

Such findings challenge the very core of our political economy’s self-conception. What, after all, do “self-reliance” and “enlightened self-interest” really mean if we are constantly being influenced on a subliminal level by the behavior of those around us? Can private property rights continue to seem right when an ecologically minded, post-modern science keeps discovering new ways in which our private acts transgress our deeded boundaries to harm or help our neighbors? Can our allegiance to the modern notions of ownership, authorship, and originality continue to make sense in an economy whose dominant technologies expose and enhance the collaborative nature of human creativity? And in an era of both idealized and vulgarized “transparency,” can privacy—-the social buffer that cultivates whatever potential for a robust individualism we may actually possess—-retain anything more than a nostalgic value?

These are provocative questions, and I don’t agree with all their implications. But I am very happy to be part of an institution capable of exploring them with the help of computer scientists, philosophers, physicians, social scientists, and humanists.

I suppose Judge Edwards would find it one more symptom of the decadence of the legal academy that I’ll be discussing my book this term at both the Institute for Advanced Studies of Culture at UVA and at MAGIC at the Rochester Institute of Technology. But when I think about who might be qualified to help lawyers bridge the gap between policy and engineering in the technology-intensive fields I work in, few might be better than the experts at MAGIC. The fellows and faculty at IASC have done fascinating work on markets and culture–work that would, ideally, inform a “law & economics” committed to methodological pluralism.
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The Black Box Society: Interviews

My book, The Black Box Society, is finally out! In addition to the interview Lawrence Joseph conducted in the fall, I’ve been fortunate to complete some radio and magazine interviews on the book. They include:

New Books in Law

Stanford Center for Internet & Society: Hearsay Culture

Canadian Broadcasting Corporation: The Spark

Texas Public Radio: The Source

WNYC: Brian Lehrer Show.

Fleishman-Hillard’s True.

I hope to be back to posting soon, on some of the constitutional and politico-economic themes in the book.

European Parliament Resolution on Google

The European Parliament voted 384 – 174 today in favor of a “resolution on Supporting Consumer Rights in the Digital Single Market.” The text of the resolution:

Stresses that all internet traffic should be treated equally, without discrimination, restriction or interference, independently of its sender, receiver, type, content, device, service or application;

Notes that the online search market is of particular importance in ensuring competitive conditions within the Digital Single Market, given the potential development of search engines into gatekeepers and their possibility of commercialising secondary exploitation of obtained information; therefore calls on the Commission to enforce EU competition rules decisively, based on input from all relevant stakeholders and taking into account the entire structure of the Digital Single Market in order to ensure remedies that truly benefit consumers, internet users and online businesses; furthermore calls on the Commission to consider proposals with the aim of unbundling search engines from other commercial services as one potential long-term solution to achieve the previously mentioned aims;

Stresses that when using search engines, the search process and results should be unbiased in order to keep internet search non-discriminatory, to ensure more competition and choice for users and consumers and to maintain the diversity of sources of information; therefore notes that indexation, evaluation, presentation and ranking by search engines must be unbiased and transparent, while for interlinked services, search engines must guarantee full transparency when showing search results; calls on Commission to prevent any abuse in the marketing of interlinked services by operators of search engines;

Some in the US tech press has played this up as an incipient effort to “break up” Google, with predictable derision at “technopanic.” (Few tend to reflect on whether the 173 former firms listed here really need to be part of one big company.) But the resolution’s linking of net and search neutrality suggests other regulatory approaches (prefigured in my 2008 paper Internet Nondiscrimination Principles: Commercial Ethics for Carriers and Search Engines). I’ve developed these ideas over the years, and I hope my recently released book‘s chapters on search and digital regulation will be of some use to policymakers. Without some regulatory oversight and supervision, our black box society will only get more opaque.