March 2, 2015

Will the abolition of book price restrictions improve Greece’s economy? (No.)


Getting rid of independent bookstores! Yes, that will *definitely* improve Greece's economy!

Getting rid of independent bookstores! Yes, that will *definitely* improve Greece’s economy!

Every Saturday morning, while the unproductive among us are sleeping in, eating brunch, or sleeping in and eating brunch (it’s difficult, but doable), the very productive (and very brilliant) writer and political strategist Matt Stoller is on Twitter.

But rather than mocking brands that say “bae” or arguing about abortion with people with five followers (which, let’s be honest, is how most of use up our 140 characters), Stoller uses Twitter to write brilliant, often revelatory numbered essays on economic history. (Yes, these numbered essays are called tweetstorms. Yes, it’s a silly word. Yes, I’m going to keep using it.)

Last Saturday was no exception. In twenty-nine tweets, Stoller discussed a 2013 report by the Organisation for Economic Co-operation and Development called OECD Competition Assessment Reviews: Greece, which you can find here. The report, which is nearly 400 pages long, describes the adjustments Greece needs to make in order to become more . . . European. Which is to say, more palatable to the Troika (the European Commission, the European Central Bank, and the International Monetary Fund).

As Stoller pointed out, what’s striking about the report is that its many recommendations do not suggest a plan for massive new growth:

Rather, the report outlines the “555 problematic regulations and 329 provisions [in Greek law] where changes could be made to foster competition.” In other words, Greece has not done enough to welcome European multinationals, but it can atone for its sins by eliminating restrictions on, say, “cement,” “bakeries,” and “over-the-counter medicines and dietary supplements.”

Oh, and—most saliently for our purposes—the Greek publishing industry.

The report’s section on the Greek publishing industry is really something to behold. The report acknowledges that:

Book production and consumption have the nature of a public good. Creating and circulating a new book not only creates value for the people who are going to read it, but also shapes ideas and values in wider society (or in exceptional cases in the whole world). Book consumption and production can help create values of national identity, social cohesion, and helps the development of criticism and experimentation. It is this unique cultural value of a book that perhaps calls for its special treatment by government regulation.

Yet it goes on to criticize Greece’s fixed price law, despite the fact that this law happens to be similar to laws in France, Germany, and other EU countries. Though the report makes some substantive points about publishers failing to subsidize their less popular (and implicitly more culturally valuable) books with profits from their bestsellers, it rests most of its case on prices, which it says are too high. (We’re back to the Candy Crush problem!) This may be so, but . . . well, you know where this is going:

On the retail side, we expect that, following deregulation, the older, smaller and more inefficient bookshops will need to become more efficient to remain in the market, ultimately benefiting readers from an enhanced offer.

This, of course, means that the report’s writers don’t have to exert too much effort to imagine independent bookstores ceding the terrain to Amazon—it’s basically an inevitability.

And yet the writers’ imaginations fail them spectacularly toward the end of the section, where they write:

In addition, the growth of other distribution channels such as large supermarkets and other retail outlets changes the structure of the retail market. As a result, the regulation appears outdated and increasingly difficult to enforce. These market trends may change book distribution channels but that will not affect book production, in the same way that there are not many record stores left in the high street, but people continue to write, record and listen to music.

This, mind you, comes after an excerpt from a report on book market deregulation in the UK, which, even in the most flattering light, doesn’t really look like a success. But even without the UK as a rather dreary case study, it’s not hard to see the problems with this comparison. The reduction of record stores on high streets may not have affected music production in and of itself, but the sharp reduction in people paying for music has been a huge and much-discussed trend over the last fifteen years.

This is not to say that online book retailing is leading to an explosion of piracy. (Though it might be!) But it’s clear that there are problems with any argument that claims that changes in distribution won’t have an impact on production. If the last thirty years of publishing conglomerization have taught us anything, it’s that diversity of production is usually the first thing sacrificed in the interest of profits. Blockbusters and niche books can coexist for a while, but eventually, the pursuit of the blockbuster will crowd out all alternatives. This seems so self-evident as to be uncontroversial, but for organizations like the OECD, “innovative new retail channels” are always the answer.

It was Stoller that led me to this fascinating and frustrating document, so let me conclude with his excellent summary of the report. After all, while each of its individual recommendations is almost funny in its needling, obsessive specificity, the conclusions to be drawn from the existence of such a document aren’t funny at all:


Mark Krotov is senior editor at Melville House.