One reason corporations focus on short-term profits is that the individuals making the decisions for a company will often take the cash made in the short term out of the company (by paying special dividends, for example) and then sell there stock, evading the long-term loss. Even if they hold onto their stock, they may have taken so much cash out of the company before the stock crashes in value that they’ve profited mightily from their holdings regardless of the company’s failures.

But still another reason is the idiocy of the regulation that is in place, regulation that instead of imposing responsibility on the companies for problems they cause limits that responsibility.

10 days ago David Leonhardt wrote about the  perversity of the federal limitations on corporate liability for oil spills and how they made BP’s oil spill, in retrospect, no great surprise:

In a little-noticed provision in a 1990 law passed after the Exxon Valdez spill, Congress capped a spiller’s liability over and above cleanup costs at $75 million for a rig spill. Even if the economic damages — to tourism, fishing and the like — stretch into the billions, the responsible party is on the hook for only $75 million. (In this instance, BP has agreed to waive the cap for claims it deems legitimate.) Michael Greenstone, an M.I.T. economist who runs the Hamilton Project in Washington, says the law fundamentally distorts a company’s decision making. Without the cap, executives would have to weigh the possible revenue from a well against the cost of drilling there and the risk of damage. With the cap, they can largely ignore the potential damage beyond cleanup costs. So they end up drilling wells even in places where the damage can be horrific, like close to a shoreline. To put it another way, human frailty helped BP’s executives underestimate the chance of a low-probability, high-cost event. Federal law helped them underestimate the costs.

We shouldn’t be surprised, then, at BP’s pathetic safety record and the retrospective inevitability of the Gulf spill:

Years before the Deepwater Horizon rig blew, BP was developing a reputation as an oil company that took safety risks to save money. An explosion at a Texas refinery killed 15 workers in 2005, and federal regulators and a panel led by James A. Baker III, the former secretary of state, said that cost cutting was partly to blame. The next year, a corroded pipeline in Alaska poured oil into Prudhoe Bay. None other than Joe Barton, a Republican congressman from Texas and a global-warming skeptic, upbraided BP managers for their “seeming indifference to safety and environmental issues.”

BP was only acting rationally!

Unsurprisingly, the Supreme Court has teamed with Congress in being an accessory to the corporate rape of the country. Even if compensatory damages are capped, conceivably courts can impose punitive damages in civil lawsuits to deter particularly egregious conduct. And, indeed, courts reacted precisely that way to the Exxon Valdez oil spill — that is, until the Supreme Court stepped in. In 1994, a jury imposed $5 billion in punitive damages on ExxonMobil for the Exxon Valdez  oil spill. 12 years later an appellate court reduced that amount to $2.5 billion, half the original amount.

2 years later, in a 5-3 vote (Sam Alito recused himself from the case because he owned Exxon stock), the Supreme Court reduced the amount to $507.5 million, about 10% of the jury’s award. The Court ruled that punitive damages (intended to punish bad behavior, not to compensate a plaintiff for his losses caused by that behavior) cannot be greater than compensatory damages (which compensate victims for their economic losses). As reported at the time, the reduced amount represented “about 12 hours of revenue for [Exxon], which reported record profits of $40.6 billion in February.” Justice Souter, writing for the Court, explained that “a penalty should be reasonably predictable in its severity, so that even Justice Holmes’s ‘bad man’ can look ahead with some ability to know what the stakes are in choosing one course of action or another. See The Path of the Law, 10 Harv. L. Rev. 457, 459 (1897). Exxon Shipping Co. v. Baker (U.S. 2008)(hyperlink added).

Of course, one might argue pretty cogently that neither the Exxon Valdez spill nor the BP Gulf spill were conceivable in the minds of the people who made the decisions that resulted in disasters and that it is precisely that failure to conceive of, much less consider, those consequences that is what the courts should retain the power to punish.

[Pellston, Michigan] is about to become the headquarters for the first fully privatized national disaster response center. The plan is the brainchild of Sovereign Deed, a little-known start-up with links to the mercenary firm Triple Canopy. Like HelpJet ["guarantees its well-heeled members a seat on a chartered jet out of the hurricane zone"], Sovereign Deed works on a “country-club type membership fee,” according to the company’s vice president, retired Brig. Gen. Richard Mills. In exchange for a one-time fee of $50,000 followed by annual dues of $15,000, members receive “comprehensive catastrophe response services” should their city be hit by a manmade disaster that can “cause severe threats to public health and/or well-being” (read: a terrorist attack), a disease outbreak or a natural disaster. Basic membership includes access to medicine, water and food, while those who pay for “premium tiered services” will be eligible for VIP rescue missions.(Hyperlinks added.)

Amy has also written 2 works of non-fiction, Kick the Dog and Shoot the Cat and Nothing Sacred: A Conversation With Feminism. She continues to write and publish both fiction and nonfiction for newspapers, magazines and literary journals. She also performs her stories, often accompanied by musicians, in schools and at summer festivals. She is presently working on a novel, a collection of short stories and a television adaptation of Tell Me a Story. She’s a brilliant teacher of writing too.

In short, Amy is an artist, she works like hell at it, she produces brilliant work, and she has never, to put it mildly, been economically secure in the way, say, many of my law students expect to be.

So I took it very seriously when she sent me the following yesterday:

All the authors I know, every one of them, is freaking out. Celebrity books. No reviewers anywhere. Insane advances to celebrities leaving nothing left for others, no reviewers, too many reviewers, Kindle, celebrity books, the death of Editor and Publisher and Kirkus Reviews, all the authors I know are freaking out. If my memoir had gone to editors even three years ago, it would be sold by now. Everyone’s scared. Whaddya think? http://bit.ly/5O2CQI

I’m choosing not to freak out. I’m choosing to say, this too shall pass, and it will enliven the art world in some new way. (That’s my prayer, anyway)

In the article Amy linked to, Katharine Weber, a former National Book Critics Circle board of directors member, novelist and short story writer, details some of the changes wrought by the internet on book publishing and concludes, among other things, “That literary work will continue to lose value as it is seen even more as just another form of communication, rather than as a work of art with its own integrity.”

There are 2 important points I want to make here: (1) I do not write incessantly about copyright and the slippery notion of authorship as some ivory tower intellectual without strong connections to artists and art art of all sorts, and (2) I have a very personal stake in these questions. So this (with some slight edits) is what I wrote back to Amy yesterday:

Not freaking out is always the better choice. I can’t think of a situation in which freaking out adds value; in fact, I can’t think of a situation in which freaking out doesn’t considerably worsen the situation.

But the fact so many people are freaking out is, in my opinion, because we’re living through a frigging technological revolution. Come on, you remember your Marx. The stuff he was brilliant about: material and economic reality determine cultural reality. Cultural reality has an effect on material reality too. That’s why the experience of a cultural freakout is not a healthy thing. It leads to bad decisions. Had Jack Valenti and the entire film industry had their way, there would be no VHS machines, no CD and DVD burners, etc., etc. But it turned out that the VHS was the biggest financial boon the film industry had ever experienced.

The way we produce, copy, and disseminate information had entirely changed. Anyone sitting in a coffee shop can produce a document that looks as if it’s been typeset. (And I’m sure my students have no clue what typesetting is.) That document can be copied at virtually no cost, and disseminated world-wide at virtually no cost. So, guess what? The entire publishing industry as we’ve known it is a walking corpse. You can almost imagine the zombie image composed of parts of Sarah Palin, Oprah, Dan Brown, and Tiger Woods lumbering down Manhattan’s avenues.

What will result? I don’t know yet. But I strongly disagree with Katherine Weber’s statement that “literary work will continue to lose value as it is seen even more as just another form of communication, rather than as a work of art with its own integrity.” The idea that literary work is anything other than a vast cultural discussion is a relic of the Romantics.

And there will still be books bought. They’ll be read on electronic readers a lot and in codex form a lot – I’m pretty sure demand for the scroll and the inscribed tablet has vanished entirely. And there will be some illicit copying and distribution (that might not in the end result in a net loss to the author).

But sure, publishing houses and anyone who’s convinced her livelihood is dependent on publishing houses is freaking out. Let them. The recording industry once had a monopoly on producing and distributing recorded music. Now any kid can do it on his laptop. And musicians are still making money. The music industry will scream and scream that the internet is killing it, but that’s because the music industry’s ways of producing and distributing music over the past 100 years have as much relevance today as the horse and carriage industry’s ways of producing and distributing means of transportation had after the automobile became widely used.

As Mike Masnick at techdirt has written, a recent report by 2 British economists (pdf) demonstrates that “the UK music industry is actually growing. Let me repeat that: despite all of the whining and complaining about the state of the music industry, some of the music industry’s own economists are admitting that the market is growing. Not surprisingly, it found that retail product sales have declined, but the other parts of the industry have grown noticeably more than the decline in retail sales. This growth has come from a few sources. Live show attendance has increased more than retail sales have decreased. Consumers have actually spent more. On top of that, the business to business side of the industry (sponsorships, licensing, advertisements, etc.) has grown as well, opening up new and lucrative means of making money.”

Neither Masnick nor I would paint the present situation has some new technologically produced utopia — too much of the money in the music industry is going to touring artists from the ancient days of our youths, among other things. But the point he is making is that trying to pass laws and create digital locks and promote misleading propaganda is not going to recreate a model of producing and distributing recorded music that no longer makes any sense.

Something new is developing, there’s no stopping it, and the thrilling thing is that we are part of creating it.

If I had to bet, I suspect in the long run we’ll probably end up with fewer writers making too much money, and more making at least some.

But there’s been literature for what, at least 3000 years? The fall of the structure which produced and sold it in the 20th Century capitalist West won’t mean there won’t be great literature. There may be more. I really think so.

I bought and started re-reading Lewis Hyde‘s Trickster Makes this World yesterday. The Trickster is the character who operates between realms, at doorways, through openings that others don’t cross either because they don’t see them or they’re afraid of what’s on the other side. (The intro to Hyde’s book is available as a pdf here — provided by Hyde himself.) And the trickster is the artist. If there’s ever been a doorway to a new reality in the world of literature, we’re facing it head on. Let’s break on through to the other side!

The idea that fewer than 1 percent of Americans are being called on to fight in Afghanistan and Iraq and that we’re sending them into combat again and again and again — for three tours, four tours, five tours, six tours — is obscene. All decent people should object. . . .

The reason it is so easy for the U.S. to declare wars, and to continue fighting year after year after year, is because so few Americans feel the actual pain of those wars. We’ve been fighting in Iraq and Afghanistan longer than we fought in World Wars I and II combined. If voters had to choose right now between instituting a draft or exiting Afghanistan and Iraq, the troops would be out of those two countries in a heartbeat.

I don’t think our current way of waging war, which is pretty easy-breezy for most citizens, is what the architects of America had in mind. Here’s George Washington’s view, for example: “It must be laid down as a primary position and the basis of our system, that every citizen who enjoys the protection of a free government owes not only a proportion of his property, but even his personal service to the defense of it.”