erosion as an unintended consequence
An erosion gully in Australia caused by rabbits. The release of rabbits in Australia for hunting purposes has had serious unintended ecological consequences. Image courtesy of Tannin.

My old friend The Law of Unintended Consequences dropped in on me the other day. The occasion was a week I spent with a publishing company operating in an emerging economy. Like other developing countries that eye the West (the people lined up at our borders is the measure of how good we have it here), there is a strong interest in improving the educational system as a means (as one social commentator and former jailed dissident put it to me) to “catch up with the U.S.” There is an unsubstantiated implication in this that the U.S. is standing still or even declining, making a catch-up feasible, but no matter: who would seriously oppose an improved educational system? We have come a long way from a time when Winston Smith would be employed to take words out of the dictionary. I should add that it is a relief to me to spend time around my social-democratic neoliberal kin, even if I have to travel to Eastern Europe to find any.

The government of this nation was faced with a clearly unacceptable situation. The school publishing market (which translates roughly to the K-12 segment in the U.S. and does not include college or higher education), had been privatized. But then the government embarked on a program that has no peer in any country I have looked at: teachers chose the textbooks, but parents had to pay for them. As one would expect, this resulted in terrible social inequities, with rich kids getting the required books while poorer kids struggled to get the materials they needed for a proper education. The cost of these books were high, and the two dominant school publishers were increasingly viewed as a duopoly that manipulated the market to their advantage (as commercial interests always will when given the chance).

The government decided to step in. The first and most important policy change (and entirely laudable, in my view) was to make the government, not parents, responsible for the purchase of textbooks. This gets at the core inequity in the old system. But then things got a bit crazy: the budget for these books was set at such a low level that only the largest publishers, with the economic benefits of scale, could make any money. So the duopoly has been acquiring all of their smaller competition, strengthening their domination of the market. (The Law of Unintended Consequences smacks its lips in satisfaction.) The government, in another bid to keep prices down, banned the use of wholesalers, requiring that all books be purchased directly from publishers (an eliminate-the-middleman strategy). This, of course, made it even harder for the smaller publishers, who could not afford the high cost of direct sales, to remain competitive. (This may have been an Unintended Consequence, but it can hardly be called an Unanticipated Consequence.) The grip of the duopoly tightens. But the educational ministry is pushing back with an ambitious program to create its own textbooks! This in a country that fought a revolution in part to rid itself of government control of the media! But not to worry: early reports are that the teachers don’t like the government publications and are using old copies of the theoretically superseded books instead. A business opportunity here: Develop a rental program for used and somewhat antiquated textbooks.

Stirred by the success of these programs, the new policies now forbid teachers from recommending supplemental material to parents. The problem here is the hell of good intentions: Stop recommending books and rich parents won’t provide advantages for their kids that the poor or indifferent cannot afford. But governments really should know better than to get in between parents and what parents think is good for their children. This will be a law more honored in the breach.

So the goals–more equity in schools, reduced costs, less influence by a duopoly of publishers–yield a stronger duopoly and the likelihood of the emergence of a black market in school texts. And even this pleasant scenario assumes that educational standards will be maintained throughout these disruptions.

Readers of the Scholarly Kitchen will note the similarities to the journals market, where efficiency-chasing libraries created the market circumstances that made the Big Deal and the development of the publishing megacorporations possible. Advocates of open access may glumly acknowledge that open publishing gives rise to the abuses that Jeffrey Beall has documented. Whatever one might think of Beall (my view is here), no one intended for a crop of undesirable and even scamming publishers to enter the marketplace. No one, that is, except those publishers themselves, who saw an opportunity and seized it.

There is of course no escape from the prison of idealism. It thrives on the mistaken assumption that it has something to do with ideas, which are messy things, almost always provisional and incomplete. The symptoms of idealism are the pursuit of comprehensive solutions (zero-tolerance programs, “no broken-windows” policing) instead of tangible and less-than-perfect improvements. The Law of Unintended Consequences fattens on idealism and has now turned its hungry eye on the publishing business, and not only in developing economies.

And, of course, I spent the week working with the company in question on coming up with ways to profit from the new government policies. In commerce it is ever thus.

P.S. It is dispiriting to return from a week in Eastern Europe, where the only English-language programming available in a hotel room was the Benghazi show-trials and sports — soccer, automobile racing, and golf — to find that NPR has just started its seasonal pledge drive.

Joseph Esposito

Joseph Esposito

Joe Esposito is a management consultant for the publishing and digital services industries. Joe focuses on organizational strategy and new business development. He is active in both the for-profit and not-for-profit areas.


1 Thought on "Notes on Publishing in an Emerging Economy"

Just curious: what is a “social democratic neoliberal”? Social democracy and neoliberalism are at best uncomfortable bedfellows. I am sure Bernie Sanders, for instance, would not identify himself as a neoliberal while he embraces being called a social democrat. Neoliberals are those who created the “Washington Consensus” economic policies led by the “Chicago boys” that drove many Latin American countries into economic collapse, and neoliberals also orchestrated the drive to turn the post-Soviet economy into a laissez-faire market economy, which of course collapsed and led Russians to elect Putin as their leader. Do you really want to identify yourself with that crowd, Joe?

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