Malignant Narcissism in the Porn Industry: A Case of Flaccid Industry Self-Regulation

In early February, 2011, the Los Angeles city council voted unanimously to draft an ordinance that would require condoms to be used on the set of every pornographic movie made within city limits. “We can’t keep our heads in the sand any longer,” City Councilman Bill Rosendahl said. “These people should be using condoms. Period.” According to The New York Times, the "city law would be the first to impose safety standards specifically on the pornographic film industry, which has largely been allowed to police itself." Until the late 1990s, the industry went unregulated. On the heels of lawsuits filed against production companies by several actresses who had contracted H.I.V., the industry created the Adult Industry Medical Healthcare Foundation in 1998. The nonprofit clinic was financed by contributions from production companies and offered STD tests for the talent. Producers agreed not to hire performers who had not been tested within thirty days. Even though the county health department accused the industry's self-regulation of failing to protect the talent and their sexual partners, the production companies claimed that the system worked well. “This has been working for years,” said Steven Hirsch, founder of Vivid Entertainment. “If we saw people getting sick, we would go to mandatory condoms.” However, STDs remained rampant among pornographic film performers. Rates of chlamydia and gonorrhea are seven times higher than those in the general population.  Taking Steven Hirsch's own statement, it could be argued that waiting until an actor looks sick to require him to wear a condom is a bit like waiting until the horse has left the barn. “Testing just acts as a fig leaf for producers, who suggest that it is a reasonable substitute for condoms, which it is not,” said Michael Weinstein, president of the AIDS Healthcare Foundation.

As with most business ethics cases, this case pits the public good against the financial interests of particular firms and employees. The self-regulatory testing system often left the talent weighing financial needs against their own safety (and one could add the public health). “At first, I would ask about condoms, and they told me I’d never be able to find work,” one actress said. “You do worry about the risk, but any girl desperate for money, like I was, is still going to do it.” It is also not in the financial interest of the production companies to make condom use mandatory. “I tried many years ago to get everybody to go to condoms,” said Jim South, a longtime talent agent for sex-film performers. “Quite a few companies did, but sales fell severely. The switch would be very difficult.”

Ethically, both the talent and the companies have been risking harm to others (and in the case of the talent, themselves as well) in order to gain financially.  It is essentially egoism at the expense of others' well-being. To the extent that AIDs is still fatal, the trade off is between killing someone (and oneself, in the case of the talent not wanting to wear condoms) and losing money. I have written a novel in which I juxapose frauduent sub-prime mortgage banker with gay college students who carelessly risk others' health (and lives) by having unprotected sex, moving from guy to guy in "hook-ups."  The harm in being kicked out of one's home onto the street may seem qualitatively different than the harm in being infected by a possibly fatal disease.  However, I contend that the callous disregard for others among the two kinds of violators renders the two as the same "type." Moreover, I submit that this "type" is increasingly salient in the make up of modern society.  In other words, modern culture, at least in the West, is increasingly taking on their attitude. In terms of M. Scott Peck's theory in People of the Lie, the self-centeredness at the expense of others is malignant narcissism.  Peck theorizes that such narcissism is actually a protective or defensive shield around a feeling of emptiness at one's core.  The evil, Peck argues, is the emptiness rather than the defense mechanisms of selfishness and lack of empathy.  The increasingly "bubble" quality of modern society, wherein people drive in their own cars, listen to their own music, and even watch movies alone on their laptops, may perpetuate the "me vs. everyone else," which in turn reinforces the attitude of malignant narcissism.

Beyond the ethical dimension, that industry self-regulation allowed for others to be harmed in the sex film industry and perhaps has even killed talent or their partners indicates a justification for government regulation. The New York Times reports that enforcement has been a problem, and that the threat of loss of the industry might undercut the regulator's power to enforce a new law. "Even if the law is enacted, city regulators may face similar problems of enforcement that have dogged state occupational safety and health officials. And some filmmakers have grumbled about moving their operations, which bring in as much as $13 billion annually, to other states." An industry can "capture" a regulatory agency not only because the latter depends on the former for information, but also because of the industry's power. This power can be exercised through government officials, even legislators and governors, who have influence over agencies. 

In the end, it is the lack of value that talent and the production companies put on human life (especially that of others, but also that of the talent themselves) that is telling in this case study. Sex itself is oriented to an instant of sheer pleasure that a peson can enjoy in him or herself. It is therefore not surprising that people in an industry involving sex are oriented to their own interests at the expense of others. Whether through industry self-regulation or government regulation, it is difficult to get around, or change, an attitude. This is the intractable problem that this case puts before us. One might ask whether the malignant narcissism is simply human nature or an instance of decadence therein.  Weakness may be difficult enough to treat; whether human nature itself can be changed so as to mitigate the squalid effects of malignant narcissism may be a question for the psychological, biological and medical sciences as the twenty-first century progresses.

Source: http://www.nytimes.com/2011/02/10/health/policy/10porn.html?_r=1&ref=todayspaper

Fraud in Selling Sub-Prime Mortgage-Based Bonds: Beyond Accountability

“In December 2011, the S.E.C. publicized its civil securities fraud charges against top executives from Fannie Mae and Freddie Mac for understating their exposure to subprime mortgages, which resulted in the government taking them over.”[1] Robert Khuzami, then the head of the S.E.C.’s enforcement division, said at the time that “all individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors.”[2] Pursuing even senior ranks has the air of fairness economically as well as in terms of the dictum, no one is above the law. So much for words; how about the accompanying deeds?

The full essay is at "Essays on the Financial Crisis."

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[1] Peter Henning, “Prosecution of Financial Crisis Fraud Ends With a Whimper,” The New York Times, August 29, 2016.

[2] Ibid.

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A Future of Regulators at Fault?

The typical case in the U.S. is that the industry being regulated resists being regulated, while the regulators insist on enforcing the regulations. To be sure, particularly strong firms in an industry may propose incremental regulations for strategic advantage—knowing that smaller or less profitable firms in the industry would have more trouble complying financially. The strategic use of regulation is an under-appreciated phenomenon in the de-regulation movement. Perhaps even more bizarre is the case of an industry complaining about lax enforcement of existing regulations and demanding even more. What industry might fit this bill? As a hint, look for a major scandal that did reputational harm to an industry.

In the industry, the firms’ calls for a crackdown must contend with a legacy of a light regulatory touch.” People in the industry question whether regulators have been “too gentle” on the firms. If a firm “runs afoul of the rules, regulators largely rely on the firms to report their own wrongdoing.”[1] It sounds like Andy Taylor’s jail in Mayberry—the keys are hanging on the wall, help yourself Otis (he was the drunk). From 1996-2011, regulators penalized only ten firms, letting scores of others off the hook “because [the] regulators deemed their violations accidental.”[2] The sounds like the work of Andy’s deputy, Barney—find the loot only to lose the criminal.

I am describing the futures industry, whose firms, “ordinarily loath to accept regulation,” decided in the wake of MF Global’s collapse and loss of $1.2 billion of customer money to spearhead efforts for “new oversight as they try to heal the black eye.”[3] The existing regulations are nearly non-existent. For example, “firms need not inform customers of the whereabouts of their money.”[4] It is no wonder that prospective customers would be hesitant to enter that arena—hence the firms’ financial interest in additional regulations. The question is perhaps why the regulators had not recommended any to Congress.

Without the usual vested interests thwarting prospective regulations bearing on themselves while Congress stands by and takes the contributions, any additional regulations “spearheaded” by the industry can be expected to be enacted. The question, I suppose, is whether the regulators will feel like enforcing them. With no headwind from the industry, lax enforcement would be an interesting nut to crack. Could it be that regulators exist who don’t believe regulations are very important? Such a mentality would be the opposite of public service—something like agnosticism in religion, only as held by clerics. Such a thing simply is not expected, hence it is worth investigating.

The most likely explanation is that the regulatory agency was “captured” by its industry, and ultimately it was in the interest of the industry itself to come up with something stronger. If so, might it be that once the new regulations are up and running, particular firms or the industry as a whole might want to capture the agency again? Even in following the industry’s “spearheading,” the agency is essentially “captured.” Is it the case in the American system more generally, that agencies are captured by their regulatees whether in increasing or decreasing enforcement? In other words, might the business and financial sectors be too powerful over government for their own good—like children telling their parents when to discipline them and when to let them get away with something?  The sectors—and in particular their largest firms—may be too powerful for a viable republic: TBTG, meaning too big to govern. TBTF might not be the biggest elephant in the living room after all.

1. Ben Protess and Azam Ahmed, “Insiders Call For Oversight of Futures,” The New York Times, January 26, 2012.

2. Ibid.

3. Ibid.

4. Ibid.