Friday, April 17, 2015

Hollywood’s Conflict of Interest in Trade Negotiations

At the intersection of business and government, a conflict of interest can be indicative of plutocracy, the rule of wealth, at the expense both of balanced public policy and democracy. That is to say, where the regulated have disproportionate influence over regulators and said influence places the regulated in a conflict of interest, the unethical dimension is dwarfed by the distortive impact on the political system. The disproportionate influence of the content industry (i.e., Hollywood) in the U.S. position on the Pacific Trade negotiations in 2014 is a case in point.

Writing to executives at Disney, Time Warner, and other content providers, former U.S. Senator Christopher Dodd suggested in his capacity as head of the Motion Picture Association that the U.S. Trade Representative, Michael Froman, might not be firm enough regarding copyright provisions in the negotiations. Specifically, the U.S. Government could have the fair-use exception in U.S. law included in the trade deal then being negotiated. That exception allows users of copyrighted material to use limited amounts of content for academic use, commentary, comedy, and art. Dodd had already written to Froman to suggest that the inclusion of fair use would be “extremely controversial and divisive.”[1] Lest the trade representative have any doubt concerning the divisiveness, Dodd indicated that he hoped he could report “back to my members that the US trade policy has not changed.”[2] The content providers would not look kindly on the Obama administration should it push for the inclusion of fair use.

That the resulting U.S. position omitted the fair-use provision suggests that the mere threat of disapprobation from major content providers was enough for the U.S. Government to relent. In terms of the public policy, the balance in intellectual property law that the fair-use exception furnishes succumbed to the influence of the content providers. That their financial position stood to benefit means that the influence on the U.S. trade position involves a conflict of interest.

Holmes Wilson, of Fight for the Future, claims “there’s absolutely no question that the [intellectual property] provisions in the deal were heavily influenced by” the content providers.[3] That is to say, they had disproportionate influence on the U.S. Trade Representative, and therefore over the public policy itself. For U.S. policy to reflect the financial interests of a vested interest in the U.S. is to put a part before the whole. The good of the whole, or common good, is thus compromised, or sub-optimal, with a conflict of interest being in the mix. Thwarting or preventing such a conflict of interest would preempt the plutocracy; the resulting public policy would reflect the common good arrived at through democratic processes. Lest this ideal be deemed too idealistic, exculpating a plutocric conflict-of-interest such as the one discussed here is a worthy task nonetheless.

The problem is that the power of vested interests is usually highly concentrated, with preferential access in the halls of government, whereas the interests that together could push through an optimal policy are dispersed and unorganized as an alliance. Relatedly, even if plutocric conflicts-of-interest were illegal, power tends to run downhill, meaning that the regulated could still pull the strings, even if on a subterranean level hidden from view (and accountability). The key to balanced public policy may actually lie in keeping industries highly competitive. Specifically, “distortive impact on public policy” from size (e.g., assets or market share) could be a basis for anti-trust law. That Disney and Time Warner were such huge companies at the time is no accident when it comes to the influence that their executives had over the Obama administration. Put more generally, concentrations of private power must be limited if a democracy is to keep from devolving into a plutocracy.

[2] Ibid.
[3] Ibid.