I was interested in this article on the health or otherwise of the publishing of serious non-fiction, in this weekend's Guardian Review. It starts with a rather apocalyptic tone and ends up in effect concluding that the reading and selling of non-fiction of the non-celebrity, non-misery kind is actually in good health.

One of the debunkers of the apocalypse hypothesis is Scott Pack, whom I heard speak across the table at a Competition Commission inquiry into the acquisition of the Ottakars bookstore chain by Waterstones. The literary, Guardian-reading (and Guardian-writing) classes at the time painted Pack as the man mainly responsible for the dumbing-down and homogenising of the British public's reading tastes. He was then the buyer for Waterstones, and clearly drove a tough bargain.

The argument went that he forced every branch to display the same narrow range of titles and there was no hope for new authors, or minority interests, in terms of accessing the prime real estate of the browsing tables at the front of the store. Publishers and authors queued up to tell the inquiry group that if the merger went ahead, there would be a further narrowing of range and less diversity and willingness to experiment with new authors or types of book.

We concluded that there was no evidence to support these claims. Apart from the existence of other types of retail outlet, especially the internet, nobody – neither publishers nor booksellers – could predict what would sell well, and retailers have a strong incentive to carry a wide enough range that the next bestseller or the next strong genre can emerge from impulse buys and word of mouth, as well as ads, reviews and online networks. Waterstones was not the monolith that the critics claimed, as its management data confirmed.

In the years since the inquiry, it seems to me that all sorts of popular non-fiction books have done very well. This includes economics books, where a whole new popular genre has emerged in recent years thanks to titles like Tim Harford's Undercover Economist and of course Freakonomics. While I wouldn't conclude that there are no worrying trends in publishing – after all, there are an awful lot of dreadful celeb titles out there being bought, and a serious economic downturn to contend with  – there seems plenty of vigour left in non-fiction publishing and reading.

The always-excellent Boston Review has a great article on the economics of healthcare by Dean Baker. It's essentially about the balance between protecting the profits of pharmaceutical companies by granting patents which allow them to price well in excess of marginal cost and improving the health of the US and global population by cutting the price of innovative medicines. Baker argues, and I strongly agree, that this balance is currently wrong. Medicine prices are set too high by big pharma, both in their home markets and especially developing country markets.

Of course, some patent protection is needed. And of course this is an increasing returns business so price needs to exceed marginal cost to a degree to cover the initial fixed costs. But for me there are two ways in which the pharma companies are over-protected and make unwarranted monopoly profits, leading to avoidable ill-health and deaths. One is that the burden of regulation is set much higher than it needs to be – the complexity and expense of compliance could be reduced, but in practice the big pharma companies use their resources and expertise to use the regulatory system as a barrier to entry. The second is that world trade rules – and the corporations – are wrong to presume that an innovation should appropriate the same degree of consumer surplus in every new market. In particular, expanding into global and poorer markets, they should not price remotely as high as they do in their own markets, nor necessarily have the same patent protection.

Just as in many other areas of IP at present – copyright too – the balance between producers and consumers has been tipped too far in favour of producers. Copyright and patent laws should be strong and should be firmly enforced, but they will be unenforcable if they are widely perceived to be unfair to the public. And they are. The content industries in general are struggling with the consequences of their failure to come to terms with the impact of new technologies and the ease of copying. Medicines are much, much harder to copy, so the pharma companies are in a more profitable position still. That governments collude with them in protecting their lucrative monopolies at the expense of public health is a scandal. I can't resist a long quote from the article – but do read it. And I hope Deb Chasman of the Boston Review will select this article for one of the book series I described elsewhere on this blog.

The final words to Dean Baker:

Perhaps the most pernicious form of drug–industry rent–seeking
occurs when companies conceal research findings that reflect poorly on
their drugs. The industry maintains control of its research and only
shares results that it considers appropriate to make public. (The Food
and Drug Administration is prohibited from revealing the results of any
studies the industry makes available to it, but evidence is
occasionally leaked by researchers concerned about the public’s
health.) A regular flow of news stories report concealed research
findings suggesting that certain drugs could be harmful, or not as
effective as claimed. The Washington Post, for example,
recently reported that the schizophrenia drug Seroquel may be less
effective than claimed. Studies revealing the potentially harmful
effects of the arthritis drug Vioxx were famously suppressed. Given the
enormous profits at stake, the withholding of relevant evidence from
drug research is entirely predictable.

While few economists would dispute that patent monopolies in
pharmaceuticals and medical technology provide incentives for wasteful
activities, they defend patents as the price we must pay for financing
drug research and development. But patents are simply one option for
financing research, not essential at all. We could expand the public
funding going to NIH or other public institutions and extend their
charge beyond basic research to include developing and testing drugs
and medical equipment. Or the government could contract out the
research and development process to private firms and pay for the work
up front so that all patentable results fall in the public domain. Or
the government could construct a prize mechanism under which it buys up
patents after the fact for a premium keyed to the patent’s usefulness.

Thanks to a tip-off from Twitter, I've become aware of this interesting new publishing initiative, Open Book Publishers, based at Cambridge University and billed as a new approach to academic publishing. One of its guiding spirits is the economist Rupert Gatti, whose work on online markets I've admired.

Anyway, Open Book Publishers says it aims to address rising prices, and the difficulty of disseminating and publishing academic work. They've established a peer review process, and professional copyediting and proofreading. Authors retain full copyright; they are not charged for publication. Digital versions are freely available, copies can be purchased either wholly or by chapter for printing, and hard copies (using print-on-demand technology) have price tags of about £10/£25 for the paper and hardback versions – prices set for a not-for-profit outcome.

Economics doesn't feature in any of the early titles, but economists will be interested in both the business model, the implications of initiatives of this kind for the dissemination of knowledge and, perhaps, in submitting books!

I shall try to speak to one of the founders for a future post. Meanwhile, the website says the aim is to combine the benefits of Open Access, including searchability in Google Books, with selectivity and academic quality:

One particularly important development for academic publishing is
the emergence of the 'Open Access' (OA) initiatives, allowing free
access by all readers to digital content. The ideals of universal
access to scholarly output are very much in keeping with the aims of
academia – achieve the broadest dissemination of knowledge through
unrestricted use of research output. In addition a large proportion of
scholarly research is publicly funded, so it seems only reasonable that
its results are made as widely available as possible.

The 'vision' statement says too:

We also minimise the typically long publishing time of academic
books by speeding up the assessment and printing process of
manuscripts. In the longer run we believe that scholarly societies and
universities are best suited to ensure the scholarly quality of
published works. To that end we foster publishing collaborations with
academic societies and academic institutions willing to develop their
own monograph series and welcome enquiries from any such organisation.

Last week I went to the launch of a new Demos publication, The Liberal Republic, by Philip Collins and Richard Reeves, which offers a great overview of the kinds of implications classical liberalism (ie. we're not talking about 'liberal' in the sense in which Americans use the word) for public policy – economic policies including taxation and redistribution, as well as social policy and civil liberties. Richard is the author of a very positively reviewed biography of J.S.Mill, a philosopher and economist highly relevant to our own times. Not surprisingly, Mill gets a starring role here. I particularly liked a line of his quoted with reference to welfare policies: “Assistance should be a tonic, not a sedative.” The Millian perspective leads to a mix of policies which does not map all that well onto current party politics: for example, inheritance taxes (but not income taxes) increased – combined with much stronger civil liberties.

The authors also more or less come out against the fashionable idea of using 'nudges' or 'choice architecture' to get people to make the 'right' choices. I wholly agree with their view that paternalism is still paternalism even dressed up in benign or light-touch form. The exceptions arise from individual decisions which have an impact on other people, a highly respectable liberal exception. So opt-out rather than opt-in choices for pension savings schemes are acceptable because the alternative is that the rest of us have to pay taxes to support in their old age those who have under-saved.

The pamphlet includes another quotation which spoke to me, from E.M. Forster: “One must be fond of people and trust them if one is not to make a mess of life.” If only more of our political and official leaders would work on that principle. But I fear the combination of eroding civil liberties (terror and technology combining to make this possible) and a swing towards regulation due to the financial crisis are going to make the powers that be more, not less, inclined to trust the people to get on with things.

I recently joined the advisory board of Demos, an excellent think tank which was previously seen as a New Labour organisation, but is now firmly non-partisan and indeed liberal in the classical sense described here. Those who're interested might want to browse the other publications on the website.

One of my all-time favourite books on the implications of the new technologies for business is Carl Shapiro and Hal Varian's Information Rules. Although it's now eleven years old, I still refer to it. The authors were incredibly prescient in their predictions for the viability of existing business models – if only music industry execs had read it. Anyway, I noticed that over at VoxEU there is a podcast featuring an interview with Hal Varian in his role as Google's chief economist. Worth a listen.