Although business/economics has become the foundation of western culture, its practitioners have circulated and tend to believe a number of myths and truisms, many of which are in fact half-truths.

You get what you pay for.

No.  You can’t get what you don’t pay for, but between over-inflated prices of certain goods (ranging from luxury products to certain prescription drugs and other aspects of health care), counterfeits, and cheap knock-offs, you often don’t get what you pay for.

 High pay is required to assure competence, especially in upper management.

High pay attracts people who are motivated by money, and higher than average pay is required for people with specialties that require long and expensive training, but there’s an upper limit, and this half-truth varies greatly in different segments of society.  More than a few studies have shown that comparatively lower-paid CEOs who are not “personalities” in general out-perform the highest-paid CEOs.  In addition, a significant percentage of the highest-paid money managers actually lose more money over time for their clients than gain it.  Likewise, money-motivated competence varies tremendously across fields.  A professional academic musician generally has more education than any MBA, but makes a fraction of the income of those MBAs in business and usually at least 30%  less than a business professor with an MBA and more like 50% less than a law professor with a J.D.  The same salary differentials apply to other academics teaching “humanities,” as well as most teachers.

Supply and demand always works better than regulation.

 This is a half-truth because it’s true as far as it goes, but doesn’t consider the implications, or what is meant by “better.”  Supply and demand is indeed the most “efficient” way to determine the allocation of goods and services, but that efficiency doesn’t take into account other values.  In a total free-market economy, in a famine, those who have money will pay higher prices for food… and will survive.  The poorest would not.  In addition, in a high-tech society, as noted above, even the most sophisticated consumer cannot determine the quality of certain goods, such as drugs, some beverages, even some foods, and therefore may well pay more for goods than “true” supply and demand would require. We’ve seen a similar issue in health care, where the “supply” of certain health care services costs more than many people can afford, which is one [but not the only] reason why tens of millions of Americans cannot afford health care.

The greater the risk, the greater the reward.

It is often true, in the case of dividend-paying stocks and bonds, that higher-risk issues have to pay out more than less risky ones, but this analogy truism breaks down in society.  Fire-fighters and police officers certainly face far greater risks than hedge fund managers, but they make a small fraction of the income that financial professionals do.  In professional sports played by both genders, such as basketball or golf, the risks are the same, but the males make more.  Now, this is justified historically by the argument that the demand for watching males is higher, and that can’t be disputed, but that points out that all of these myths/truisms are anything but absolute, even though they’re all too often dragged out as absolutes, especially by business people in pursuit of the bottom line and more of everyone else’s money.

The business model works better.

This half-truth has recently been promoted as the answer to virtually every ill in public institutions ranging from schools and universities, to municipalities, charities, public hospitals, and prisons. And, of course, the question is, again, what is meant by “better.”  In education, the business model has been applied in terms of teacher-pupil ratios or in higher-education, what disciplines are most “cost-effective.”  Unsurprisingly, the hard sciences and the performing arts are the least cost-effective educational disciplines, because the sciences require expensive equipment and additional laboratory sessions and the performing arts require intensive one-on-one training, especially in vocal music. While good financial management is clearly a necessity in any organization handling significant resources, the bottom line of the business model is to cut unnecessary expenses, and services/products which do not cover their costs, and to maximize revenues.  The business imperative is to look out for the business, and only to look beyond the business as necessary to assure its profitability and survival.

Public institutions, by their nature, provide goods and services that society has deemed necessary, even if not “profitable” for the specific institution.  That is why they are public institutions. Public hospitals are mandated to provide health care to people who will never pay their bills.  Schools must handle problem students and disabled students whose education is anything but profitable or cost-effective from the business standpoint.  Fire-fighters will often spend more time and effort putting out a fire than a structure is worth, even when no others are threatened.

So… the next time someone starts spouting these economic “truths,” it wouldn’t hurt to think about just how “true” they are in the case in point, especially if it’s a politician doing the spouting.

Senator Mike Lee of Utah protested the representation of his position on the television show “Newsroom.” On the show the lead character, a news anchor, states that Lee is for the repeal of the Fourteenth Amendment.  He also says that Lee has a double-digit lead over Senator Bennett, the most conservative member of the Senate. For those who actually follow politics, the show is only partially correct.  Lee only favors repealing the part of the Fourteenth Amendment that allows citizenship to any child born in the United States of foreign-born parents here illegally, and Bob Bennett never got to a primary election because he didn’t even get 20% of the votes in the Republican state caucus.  The problem the writers of the show faced was that trying to explain what really happened would have lost most of the audience.  So they opted for a simplification that was essentially true to the spirit of the situation, showing Lee’s ultra-conservatism and his appeal to the far-right Republicans, but, factually, it was a misstatement, resulting in a half-truth, if you will.

This whole tempest in a Utah teapot, however, raises a much larger issue.  How does one raise vital issues in a complex world with a twenty-second attention span without either losing the majority in the details or oversimplifying into half-truths that can often be misleading? In the case of Mike Lee, the half-truth is partly incorrect, but not misleading.  He is now in all probability the most right-wing senator serving in the Senate, and if not, so close to it that in political terms it makes little difference.

Although I’ve criticized the opponents of the Affordable Health Care Act for their misleading statements and half-truths, the fact is that, for all its virtues, its supporters have also engaged in a campaign of half-truths, because the act won’t solve all of the health insurance problems facing the United States.  Even the individual mandate features won’t force full coverage, because the fines imposed for not having coverage are most likely to cost non-compliers less than insurance would, for those who could afford insurance, and for those who cannot, it’s rather difficult to obtain funds from those who have none.

Senators and U.S. representatives who head to Washington promising to balance the federal budget and get spending under control are spouting half-truths, if not total falsehoods, because no senator and no representative can do that by himself or herself.  Any successful legislation requires in these days 60% of the Senate and a majority of the House of Representatives, and all the rhetoric in the world won’t change that.

Part of the problem is the complexity of the world in which we live.  As I’ve noted before, we all prefer simple answers and explanations, but most of the problems we face don’t have simple answers.  The tax code, for example, is a complete nightmare of complexity.  Why?  Because straight and simple taxes are often unfair and fall disproportionately on certain individuals or people who live in different places or under differing circumstances. New industries might never develop without certain tax breaks, and so Congress, almost as soon as an income tax was made constitutional, began to amend and change the tax code, both in the interest of “fairness” and in order to encourage and discourage certain behaviors. Those who wanted those changes certainly didn’t tell the “whole truth.”  They said what they hoped would get what they wanted.

In the end, everyone wants the “other guy” to tell the whole truth, but not to tell it themselves, and that hasn’t changed a lot since the dawn of government, and certainly not since the founding of the United States, but too many half-truths result in fundamental misunderstandings and problems in a time of greater complexity and greater ramifications arising from all too many business, political, and technological changes.

That said… will half-truths persist?  Of course. They’ll even multiply, based on the all too human need for a simplicity that doesn’t exist in a modern world.

The other day I was reading a report on the results of a psychological survey.  I can’t say that the results shocked me, but they were interesting.  Controlling for all other controllable factors, those people who are the happiest are married, religious, conservative extremists.  The next most happy are married, religious, liberal extremists, but there are a whole lot fewer of them, because very few extreme liberals are also religious.  And needless to say, according to the study, the most unhappy are unmarried, non-religious moderates.

The study didn’t attempt to analyze the reasons behind those findings, but from what I’ve seen, people tend to be the happiest when their lives are the most stable.  Being married, especially for a long time, makes for stability.  So does a philosophical mindset that remains stable and undisturbed by facts contrary to that mindset, and extremists almost never consider that which might upset their beliefs.  Likewise, for the religious, religion provides great stability and comfort.

Now… it’s no secret that the American political process has become polarized, and each of the major parties has come to embrace platforms and issues tending toward the extreme.  Yet, as each election in recent years has come around, there’s been an apparent groundswell of voters saying that the parties don’t represent them, that they’re more middle of the road. I’m beginning to wonder about that.

And there’s another factor involved.  When I was a much younger man, in high school and in college, when young people were asked what they wanted to be, most had fairly concrete ideas, not that many didn’t change their minds.  They wanted to be pilots, doctors, electricians, even plumbers, and some even wanted to be President. Today, when I or my wife asks college students what they want to be, the single largest response, dwarfing all others, is:  “I want to be happy.”

So does anyone who is sane, I think.  Who really would want to be unhappy [although I’ve known a few people in that category]?  But the problem with that response is twofold.  First, in practical terms, happiness isn’t really a goal;  it’s a mindset and response to what else you’re doing in life.  Second, if happiness does become a goal, what makes it most possible?  Apparently, a mindset that, over time, is incompatible with a representative democratic republic comprised of a population with a growing economic and ethnic diversity.

Just a few thoughts….

Given a number of reactions to my last blog, as well as the ongoing discussions, I realized, if rather belatedly, that two aspects of the whole question of the piracy of items mainly of intellectual property, e.g., movies, books, and music, seem to have been overlooked, or at least greatly minimized.  The first aspect is the fact that people regard items largely embodying intellectual property as fundamentally different from other items of property that are also bought and sold in commerce. Many people, as indicated by a number of comments on this blog, tend to regard the purchase of a piece of music or a book as a permanent license to that music or book, with no requirement to purchase another copy when the first is no longer available or useable.

My wife is a singer and a professor of voice and opera.  She has original, i.e., bought and paid for, sheet music for over 5,000 songs, largely from opera, oratorio, art song and the like, or music theatre.  Sheet music is expensive.  And at the end of every school year, she has to replace some of that sheet music, some because it’s old and literally falling apart, or otherwise damaged or unreadable, and some because it has “disappeared,” in one way or another.  Voice students who enter competitions must supply one or two [depending on the competition] original pieces of sheet music for each song that they have on their competition entry sheet.  Use of copies disqualifies them.  Often the student’s teacher supplies one copy [legally borrowed from the teacher], and the student supplies the other. It doesn’t matter how many times my wife or a student has bought a particular piece of sheet music; copies are not allowed.

Likewise, and perhaps this marks my mindset, there certain books that I’ve bought several copies of over the years when the previous copy deteriorated or was damaged or lost.  I didn’t feel that I “owned” the right to Roger Zelazny’s Lord of Light when the dachshund dragged it off the lowest shelf of the bookcase and used it as a chew toy.  I bought another.

When we buy a pastry from a fancy bakery, we don’t think that we should get all subsequent versions of that pastry for free… or reduced rates.  So why do people think that books or music are different?  Goods in trade are goods in trade.  Admittedly, probably the only reason other goods aren’t pirated is because there’s either no way for an individual to make a copy or the cost of making it would exceed the cost of buying it.

What’s different about ebooks, music, and movies is that we as a society have reached the point where these items can be copied cheaply and almost undetectably.  Because the cost of copying has become so cheap, at least some people, and that “some” becomes tens of millions in the aggregate, equate the cost of duplication to the value of the item.

One commenter justified making pirate copies of DVDs because his videos were damaged in moving by events beyond his control.  Well… by that token, shouldn’t all of us be able to pirate or get knock-off copies of anything that’s been damaged or stolen by others [and I’m not talking about insurance, because you pay for insurance]?  Another claimed that the movie industry was flooding the market, and that publishers were doing the same, but in point of fact there are fewer movies released annually today than there were in the years between 1930 and 1960, and in F&SF, the number of books released by major and specialty publishers has remained fairly constant for about ten years.  What that commenter was essentially saying was that people can’t afford all that is out there, and because the quality is uneven, they pirate. Not having the money to afford goods or because the quality is uneven is a valid excuse to pirate?

Several other commenters made the point that the drop-off in paperback sales is due to high prices.  That’s frankly bullshit… or a cop-out, if not both. I went back and looked at the paperback prices of my fantasy novels in 1995.  That was before the big drop-off in paperback sales began. Paperback versions of my fantasy novels were then priced at $6.99.  My latest paperback novels are priced at $7.99.  Over this period U.S. inflation, measured by the U.S. CPI, has been just about exactly 50%, while the price of paperbacks has gone up 14.3%. In real dollar purchasing power, paperback books [at least mine] now cost less in real purchasing power than they did 17 years ago. Pricing shouldn’t be an excuse. Now, it may very well be that many would-be readers today don’t want to pay as much as either they or their predecessors once did… but please… it’s not the price “increases.”  And by the same token, an ebook priced at $7.99 today would “cost” $5.34 in 1995 dollars.

Another possibility for the drop-off is simply that reading skills have declined. Studies show that a greater percentage of the population has difficulty concentrating on long reading passages, and if reading is a chore, then it’s not enjoyable, and those people won’t read as much. Reading also takes a lot longer for a pay-off/satisfaction…and we have become a more “instant” society.  So… in terms of price, people may well not wish to pay as much for a book as they once did… but it’s not because the books are more expensive, but because people wish to pay less, and that’s not the same thing… and, again, justifying piracy or theft because the price is more than one wants to pay is in fact intellectually dishonest, not to mention illegal.

Finally, the second, and equally disturbing, aspect of intellectual property piracy is that it effectively devalues the creators of such property, particularly in the case of authors, in comparison to other occupations in society, not because the worth of those creations has changed, but because the easy of pirating them has increased manyfold. Twenty years ago, most F&SF books sold 30,000- 100,000 copies in paperback, if not more.  Today, the same authors and authors of the same level of popularity and ability are only selling 10,000 – 40,000, and their ebook sales only make up a fraction of the difference.  Is the product worth that much less?  I don’t think so, but I’ve seen author after author vanish as their sales decreased below the level of profitability.  I’ve mentioned this on and off for the past four years, and people nod and agree, but paperback book sales have plummeted, and hardcover sales have declined, and ebook sales have not made up the difference.

Buying a book equals unlimited free lifetime copies?  Not until I get free unlimited lifetime pizzas for purchasing one pizza.

I hate to suggest it, but there’s more and more evidence out there that either high technology users are more dishonest than the rest of the population or high technology has a greater attraction for the dishonest… if not both. The June  20^th edition of Scientific American reports on the results of a study on movie piracy, and it turns out that the movies with the highest percentage of piracy are science fiction and high-tech thrillers, and that the annual cost of such piracy in just those genres exceeds a quarter of a billion dollars.

There are literally scores of bit-torrent sites advertising my books for free, at times even before the first hardcover release, so many sites that it would take almost all my time just to even contact them to demand they stop making the books available.  And frankly, I don’t care what a handful of authors say about the wide-spread dissemination of their work resulting in greater sales of their newer works.  In point of fact, most authors have suffered significant losses from internet piracy.  An admittedly random survey of such sites also indicates, as with movies, that a significantly disproportionate number of titles fall into the F&SF area.

Part of this, I’m convinced, is that high-tech oriented people are, in general, less patient.  They want it NOW.  Many of them have little patience for the quirks and foibles of marketing and for the reality that some people in any field, including bookselling, are not as competent as they could be, nor are these individuals particularly understanding of what goes into producing information.  I’ve even seen gripes that ebooks are being priced higher than bargain or remaindered versions of hardcovers.  Alas, I also know authors, some of long-standing in the field, who fail to understand this and go around spouting the wonders of the internet, without comprehending the costs to themselves and to the field.

Then, there’s the “information wants to be free” group, who, as I’ve discussed before, all too often really just mean, “I don’t want to pay for any information.”  Sometimes, this is disguised under the idea, such as with ebooks, that because the marginal cost of transmitting and disseminating the information is so low, the prices charged for information [books] are too high. In this regard, I’d like to point out one small matter.  I manage to write a little over two books a year, and it takes me roughly five months to write a fantasy novel. How would any of you who “justify” using torrents or other illegal sources to get my work for nothing like to feel that users of five months of your labor shouldn’t have to pay anything?  That doesn’t count the services of cover artists, proof-readers or editors.

Now, again, I must stress, I am NOT against technology. I am against its abuse. As part of this same trend, internet scams and other high-tech enabled crimes have skyrocketed over the past decade so much so that no enforcement authority really has any idea just how prevalent this is.  There are only estimates, some possibly accurate. I must get 20-30 of these daily, most but not all trapped by my spam filters.  And the behavior and business ethics, or lack of same, by internet and tech entrepreneurs such as Bezos and Zuckerburg doesn’t do much for presenting a case for high-minded behavior in the tech arena, either.

Much of this, I realize, is simply that high-tech offers greater opportunities for everything, and dishonesty is part of those opportunities. The second part is that, because of the impersonality of high-tech, particularly the internet, it becomes easier for those inclined to cut corners or be dishonest to rationalize their behavior, i.e., authors make lots; they won’t miss the sale of a few books; anyone who’s stupid enough to fall for the phishing scheme deserves to lose their money; the entertainment moguls charge too much for movies – and so it goes. It’s still rationalizing dishonesty, and it’s anything but a healthy direction for society, and it particularly distresses me to learn that a disproportionate amount of it comes from the F&SF –oriented sector.