On Politics: The Logic of the Illogical

As an editor, I constantly have to watch for author statements that are illogical. Unfortunately, that practice doesn’t stop at the workplace door; it carries over to election-year politics and makes me a wary consumer of political talk.

What brings this to the fore is a recent statement by the Republican (expected) nominee for president, Mitt Romney. As reported in the New York Times (“Romney Seeks Obama Apology for Bain Attacks,” by Michael D. Shear, July 14, 2012, electronic edition, p. 31), Mit Romney said on Fox News:

You just had very bad news on the economic front, with now 41 straight months with unemployment above 8 percent.

Romney made this statement in support of his demand that the Bush-era tax cuts on the income of the top 2% of earners be made permanent and not be allowed to expire come January because these 2-percenters are the job creators and to raise their taxes would destroy job creation!

This has been a constant refrain of the Republicans and the Romney campaign. What I would like to know is, “Where are these jobs being created?” In publishing, the jobs are being created in India, not America. In America, editors are both losing work and being forced to accept lower wages as a result of this migration of jobs from America to India. I do not see John Sargent, CEO of Macmillan, or Markus Dohle, CEO of Random House, or the CEO any of the other major American publishers — all members of the 2% club — promising, in writing, to create new American jobs if their personal tax cuts are preserved.

In response to a recent solicitation I received asking me to make a campaign contribution in support of Romney and the Republicans, I wrote back with this offer:

I will make a contribution if you will answer these questions directly and without obfuscation: If keeping the tax cuts on the wealthiest 2% of American society will create jobs as you claim, why haven’t those jobs been created in the past decade while the Bush-era tax cuts have been in place? Why, if these wealthy 2-percenters create jobs, did we have significant job loss during the current life of their tax cuts? How many new American jobs have the Koch brothers, and John Sargent (Macmillan CEO), and Markus Dohle (Random House CEO) guaranteed — in writing — to create within the next 12 months (and how many new American jobs did they create over the past 4 years) as a direct result of the reduced personal rate of taxation they received from the Bush-era tax cuts?

I am still waiting for a reply, and I’m not holding my breath.

The reality is that the claim that reducing taxes for the wealthiest 2% of Americans increases American jobs is illogical, whether made by a Republican or a Democrat. It is a remnant of the flushdown economics of the Reagan era and ignores the fact that jobs grew under Reagan only after Reagan increased taxes and continued to grow (with resulting budget surpluses) under Clinton when tax rates were both raised and significantly higher than under the Bush-era tax cuts and current rates.

Interestingly, Obama, who should be attacking this kind of illogic, doesn’t seem to fight back by demanding that Romney and the Republicans put their cards on the table face up. It seems to me that Obama should be demanding real numbers from the Republicans. Make the Koch brothers pledge in writing to either create 100,000 new American jobs within 6 months of the election if the tax cuts are extended — regardless of whether they are extended by Romney or Obama — or agree to pay a $5 billion penalty. Require other 2% recipients — such as the John Sargents and the Markus Dohles — of the benefits of the tax cut to make the same pledge to create a specific number of new American jobs or pay a significant penalty, and have enough of them make the written pledges so that American unemployment will be reduced to less than 2%. Then I’ll buy the argument that these are the job creators, as will all other Americans!

The reality is not only will the 2-percenters not make such written pledges, but that they are not job creators. They are money makers and obligated to make as much money at as minimal a cost as possible, which means exporting American jobs if it is cost-effective to do so, which is what they have been doing all through the Bush-era tax cuts.

I have noted that Romney and the Republicans are very careful to talk about “job creation” but not “creation of American jobs”. The implication is that the jobs that the 2-percenters create are American jobs; the reality may well be different.

The Republican rhetoric also ignores the realities of the business world. Consider the recent $7+ billion loss suffered by JP Morgan Chase as a result of bad trades. The losses were incurred by a small group of individuals but already threaten the jobs of thousands of ordinary employees who had no connection to the loss-making trades or the division of Chase that made them. Yet, Romney and the Republicans want to give Jaime Dimon, CEO of JP Morgan Chase, a tax break because he will “create” new jobs. What will he do? Hire another valet? Tax breaks for Dimon have no effect whatsoever on whether JP Morgan Chase hires or fires employees.

How much more misleading can the Republican discourse be? Not much, but it sure makes for good bullet points on Fox News. Most of the 2-percenters are employed by a corporation or a foundation or some other business organization whose job-creation decisions are made independently of the personal finances of these 2-percenters. Yes, there are some exceptions, but not many.

The Romney-Republican argument on taxing the top 2% of Americans belies another premise of their presidential campaign: to-wit, that Romney really understands how jobs are created. Jobs are created by the masses spending more money and buying more goods and services, not by a 2-percenter suddenly deciding to trade in last year’s Lamborghini for this year’s model. Economic recovery is not in the hands of the few; it is in the hands of the masses, which is why consumer confidence measures are so important.

It isn’t clear to me what it will take to get voters to look beyond the twitteresque rhetoric and demand that politicians put up or shut up. Nor is it clear to me what it will take to get the Obama campaign to put the Romney and Republican campaigns’ feet to the fire. But in both instances, I hope that such a test occurs because the decision we have to make in November could be catastrophic for America if it is the wrong decision, especially if it is a decision made on platitudes rather than fact.

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The Screw You eBook Deal

Every week it seems something new is happening in eBookland to set the ebook cause back a decade or two. Always at the forefront of the reversal of fortune is greed.

This week’s menace to eBookland is literary agent Andrew Wylie and his new publishing venture Odyssey. Wylie could have summed up his actions in simple terms: to disserve both his clients and the ebook-buying public. What, you ask, did he do? He agreed to give Amazon exclusive rights for 2 years to his authors’ backlist titles; Wylie will publish the books and exclusively sell them through Amazon. The backlist includes authors like Philip Roth, Ralph Ellison, and John Updike.

This is tragic on many levels. First, unless he has been given exclusive information by Amazon, he really doesn’t know how much of the ebook market Amazon “dominates.” All Amazon says is “we’re #1” but has yet to actually prove it. Everyone assumes it is true, but without hard data, it is just an assumption (and you know what assuming does — it makes an ass of u and me!).

Second, even if Amazon has the largest single-vendor market share, it isn’t certain that how dominant a market share it has when all players are considered. Everyone assumes it does, but no one really knows — Amazon hasn’t put any real numbers on the table, just the hype, which makes me suspect that that’s all it is –hype.

Third, contrary to what Wylie thinks about his backlist authors, there is nothing out in the open that demonstrates that they are worth the $9.99 that is planned to be charged. What data does Wylie have to demonstrate that $9.99 is the ideal market price point for decades old books? I might reread Ellison at $1.99, but not at $9.99 — he (and Roth and Updike) just aren’t that good. Wylie complains about the Agency 5 pricing and then proceeds to draw a number out of the air himself.

Fourth, 2 years is a long time to exclude all other ebooksellers from having the ability to sell these books. It ignores the thousands, if not millions, of readers who do not buy from Amazon and who do not own a Kindle (and who do not want to read on their PCs or cell phones). If Wylie were my agent, I’d be looking for another one. As a writer I wouldn’t want thousands (millions) of potential readers excluded. As icing on the cake, no one knows whether at the end of the 2 years Amazon has an option to extend that exclusivity. It would fit Amazon’s usual tactics.

Fifth, if Wylie’s goal is to sell as many of his client’s books as is possible, why would he give exclusivity to a company who uses a format that is incompatible with every other ebook-reading device? I hear the pundits now: Because Amazon has an application that lets you read on nearly every device imaginable, just not other dedicated ebook reading devices.

This argument intrigues me. I understand James Patterson or Stephen King taking this position because they are currently writing bestsellers. The likelihood that someone will agree to read the latest James Patterson novel on their mobile phone or their PC is decent — not great but decent. But will these same people want to read a long ago Roth or Ellison or Updike novel that way? I have my doubts. I don’t personally know anyone who reads a book sitting at their desk on their PC or on their cell phones for pleasure (although I am assured that there are people who do), because that is what we are talking about — pleasure/leisure reading.

The argument also discounts all the people who buy ebooks at, for example, Barnes & Noble, which also has applications for various devices and keeps adding them. Are we to be an ebook world of Amazon only, perhaps a little B&N, but no one else?

Sixth, is the arrogance factor. Wylie doesn’t like the Agency 5’s pricing. Fine. Most ebookers don’t either. But you tell me how giving Amazon 2-year exclusivity at $9.99 sends any message of dislike about Agency 5 pricing to the Agency 5 — or even to the consumer. The only message I get is the one to the consumer, which is “screw you! If Amazon is willing to pay enough for exclusivity, I could care less whether you can read my author’s books.” Reminds me of an old radio ad: “Money talks and nobody walks!”

I admit that John Sargent’s (Macmillan) response was laughable in light of his own actions as a founder of the Agency 5. But even so, his response was on target. This exclusivity deal is not good for anyone. Is the goal to discourage reading and drive sales down? If so, these long-term exclusivity deals are a good step in that direction. People are interested in buying books only if they are available when they want them, in the form they want them, and at a price they are willing to pay. Wylie’s exclusivity deal is a 3-strike out: the books aren’t available to many readers in a form they want at a price they want to pay for ghosts from the past — $9.99 is the price point for new bestsellers, not old books from has-been authors.

And did Wylie give any thought to what state of affairs he is helping to create in the long-term? If giving a 2-year exclusive deal to Amazon is his idea of long-term strategic thinking on behalf of clients, he needs to get off his meds. Giving Amazon these kinds of deals plays into Amazon’s long-term goals of dominating ebook publishing and being able to dictate all terms. Every exclusive deal adds a nail to the coffin of marketplace competition because once Amazon sews up a significant portion of the market in these kinds of deals, Amazon will be able to dictate terms — all other competition will have been buried because they can’t get product to sell and they won’t be able to sell for less than Amazon. (That is also one of the problems with the Agency 5 thinking but at least they make their books available to everyone.)

Now that I have castigated Wylie, a punch needs to be thrown at the Agency 5 who brought this about. What did the Agency 5 think Amazon would do in reaction to their concerted efforts to control pricing? Amazon has done the smart thing for Amazon (although not, ultimately, for the consumer) in pursuing these exclusivity agreements. If anything will undermine the Agency 5, it is these deals. Unfortunately, consumers will be collateral damage. The Agency 5 thought Apple would be their savior; they were willing to overlook the fact that Steve Jobs and Jeff Bezos are identical twins. And so they pushed Amazon and now Amazon has pushed back.

Wylie has made what I consider to be a fool’s deal, but the deal is of the Agency 5’s making. “You shall reap what you sow” should become the motto of the Agency 5; Andrew Wylie should resurrect as his motto “Money talks, nobody walks.”