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In a Direct Line - Photo by Ulli Diemer

The myth of a free market
in publishing and high-tech

By Ulli Diemer


Letter to the Editor, Computing Canada:

The two readers who wrote to complain about your sensible editorial on Bill C-55 would have done well to familiarize themselves with the facts before sending off such spectacularly ill-informed letters.

Contrary to what Ryan Jamieson imagines, Bill C-55 has nothing in it to "impose huge cross-border penalties on U.S. magazines entering Canada." The legislation has no provisions whatever affecting the sale of foreign publications, U.S. or otherwise: they would continue to be available on Canadian newsstands exactly as they are now.

Bill C-55 deals with advertising services: ads placed in American split-run magazines by Canadian advertisers would draw tax penalties. This is standard anti-dumping legislation, variants of which are used by many countries, notably the U.S., to prevent unfair competition. Split-runs are a classic example of dumping in that they can be produced without having to hire staff to produce the content, because the content is picked up free of charge from the U.S. edition. This means they can sell ad space far below normal market rates and wipe out Canadian magazines by eliminating their source of revenue.

Mr. Jamieson further betrays his lack of knowledge with his absurd claim that the IT industry flourished "because of a free-market environment". He could not possibly be more wrong. The high-tech industries, in the U.S. in particular, owe their very existence to massive levels of government subsidies and intervention. The Internet, for example, was created and developed by the U.S. military in co-operation with government-funded universities. It was turned over to the "free market" only after more than 25 years of publicly-funded work had made it commercially viable. The electronics, semi-conductor, and computer industries, the communications industry, the aviation industry, the biotechnology sector -- all the important high-tech sectors in the U.S. -- have been developed through huge, and continuing, public subsidies backed by extremely aggressive protectionist legislation.

If Canadians are going to compete in the global market, we owe it to ourselves to understand how that marketplace really works. And that's a good argument for taking steps to protect our industries, including publishing, from unfair competition.

Ulli Diemer
30 March, 1999



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