Q&A / A conversation with Shraga Biran
The lawyer and businessman who believes the information age offers an opportunity to end poverty, if only the proper reforms are made.
Shraga Biran’s life offers a uniquely Israeli success story. Born in Poland in 1932, he was the lone member of his family to survive the Holocaust, part of which he spent in the forests with the Soviet partisans. In Israel after the war, initially a committed socialist, he lived briefly on a kibbutz before becoming one of the country’s most successful lawyer-businessmen.
Though he in fact profited fantastically from his own work as a pioneer of the privatization of public lands, and is today part owner of the company that controls the Dor-Alon gas stations and the Blue Square supermarket chain in Israel, along with extensive holdings in the United States, Biran remains distressed by the inequitable distribution of wealth and the persistence of poverty around the world.
This month sees the release of an English version of the book he published in Hebrew in 2008, in which he outlines the steps he believes need to be taken to ensure that the new and, he believes, limitless wealth being generated by the digital revolution is spread around more widely and fairly. In “Opportunism: How to Change the World – One Idea at a Time” (Farrar, Straus & Giroux, 224 pages, $25), which has been rewritten for an American audience, Biran explains the failures of both the collective economies of the former Communist bloc and of Reagan-Thatcher style neoliberalism.
He argues not for revolution, but rather for the “redistribution of the wealth not yet distributed” to those whose imagination and initiative (their “opportunism”) are creating that wealth. As part of this effort, he offers several suggestions for rewriting the laws of intellectual property that would be more appropriate for the information age.
“Opportunism” is a dense and serious book that should serve less as a blueprint for action than as a catalyst for those considering the systemic changes required to retool the world’s “best of times, worst of times” changing economy. Haaretz spoke with Shraga Biran by phone from France, where he was on a year-end vacation.
Your book includes many ideas and a lot of intellectual and economic history. What are the primary messages you want the reader to walk away with?
We are at the beginning a new era, in that we are witnessing the growth of a new kind of wealth, produced by a new socio-economic stratum. According to the World Bank, for example, today about 85 percent of the wealth of nations is intangible: not houses, or factories, or raw materials. Rather, it consists of ideas, of intellectual property. Also, 70 percent of the wealth that exists today didn’t exist 30 years ago. This new wealth is not perishable: The more you use it, the more it grows. So, the basic principles of scarcity no longer apply. Hence, the institutions of classical capitalism are no longer appropriate. That is my main thesis.
Does this thesis also apply to the developing world, where the new wealth may be less central to the economy?
Yes. Structural reforms are changing the developing world. By creating political and economic institutions that advance the new class, they supply a platform for the creation of new wealth. When globalization began, the left’s critique was that the outsourcing of industrial production would create modern sweatshops in China and in India. Look what happened instead. Twenty five years ago, the Chinese made less than $2 per person a day. There was famine. Today, after structural reforms, the GDP there is more than $6,000 per person, and there’s no famine. And on the country’s eastern coast, where there are some 600 million people, the figure is 2.5 times that. China makes the world’s best products, including in the agriculture sector. There is a whole new creative class there, with new wealth, and more students and scientists than anywhere else in the world.
Where does the 2008 crash fit into your thesis?
The crash was not a cyclical event. It was not a recession. It was structurally caused, and it proved that the tools of neoliberalism – which has dominated economic theory for the past 30 years – no longer solve the problems. Neoliberalism destroyed a great deal of wealth, deprived many people of their homes and jobs, and destroyed entire financial systems. Ronald Reagan may have declared that “the problem” was the state, but in the last crash, it became the solution – the insurer, lender, investor and the last-resort guarantor to the entire financial world. The free market god has died. Neither neoliberalism nor the central planning systems solved the problem of poverty or of social gaps. Today, 20 percent of Americans control 80 percent of the country’s wealth, and 1 percent controls 50 percent of the property. Globally, more than one billion people live on less than a dollar a day. The widening of the gaps is a sign of failure, especially as wealth continues to grow dramatically.
How can you make it so that more and more wealth that is connected to the state, or that the state creates as a regulator, is distributed in a fair manner? Through social privatization. I say that, because the new wealth is facilitated by the state – the intellectual property, the building rights, the ability to create new institutions – all this creates the possibility of the state distributing the wealth, and, by way of affirmative action, of minimizing the social gaps and minimizing poverty in these states.
This is the kind of language that makes Americans see red. As soon as one mentions “redistribution of wealth,” they panic that it’s the advent of socialism.
But this is coming from the center, not the left or the right. The problem of poverty, inequality and unfairness in the distribution of the new wealth is not only a moral one. Creating an economic basis for more people to join the new social stratum is an economic imperative. Otherwise, the “have nots” will be a potential source of terrorism and unrest. When [Barack] Obama came to power, everyone was convinced that we were entering a new era. Americans had voted for change.
But change didn’t occur, and the economy continued to operate by the models of the Bush era. The shared prosperity did not occur. The linking of wages to productivity did not occur. Productivity had gone up 90 percent over 15 years, but wages remained static. The crash was not caused by a shortage of services or materials, but because the demand side of the economy crashed.
I offer an alternative. Not a revolution: That’s what a redistribution of the existing property would be. That hurts private property and is undemocratic. But to distribute the undistributed wealth is another story. I want to convince people that opportunity has turned into the essence, into a property. It’s possible today to reach any place, at any time, to get information and to develop yourself and the economic and social possibilities that you live in. But to realize this, people need a minimal economic basis.
One must have free time, to be used in a manner that can liberate you from the immediate economic needs: a roof, a basic income, health, the ability to acquire education. I think the Swedish shared-prosperity model is a good example. In a world that is so rich with a majority of the population which is so poor, the failure of the current systems is evident.
In the book, you call for rewriting the laws of intellectual property so that the people writing the new computer algorithms, and other programs, can retain ownership of their creations. But how would it be possible for someone working for, say, Microsoft or Google, to hold the rights to things they have invented while on the job? And is it even fair to demand that?
Most patent laws says you can’t patent ideas. But I say that when they are “wealth-bearing ideas” there’s no reason not to recognize them as property. My concept is to give ownership to someone who has created ideas that can create wealth. As a possibility, for example, I suggest giving people the opportunity to register their ideas in an “idea bank,” so that they would maintain the possibility of receiving some of the income from what they produce. It’s the most moral creativity of all.
Classical capitalism produced wealth on the basis of sweatshops. The guys at Google or at Facebook or Microsoft, people who made so much new wealth, did so using their brains. They didn’t exploit someone. It is moral wealth. They were successful in patenting their ideas, but today most people who create new ideas don’t have that opportunity.
The basic idea of the structural reforms concerning intellectual property is to grant property rights to wealth-bearing ideas. In the first phase, if it’s clear that an idea may be fruitful, it should be registered. This would make it accessible to the public, but by creating wealth in the future, it would guarantee that the creator gets his share. Neoliberalism talks about private property. But when it comes to wealth based on ideas, why is there no private property?
Is there a way for employee and employer to share revenues?
Yes, it’s possible. But it needs to be done in a fair way. To negate the ownership from the producers of the algorithms, why is that fair? The method of patent registration has existed for several hundred years, and almost hasn’t changed, even as intellectual property became such an important element in the global economy.
Or, look at the crisis faced by publishers of books and newspapers, because of the Internet. Google wants to transfer 130 million books onto the Web, the number apparently extant in the world, and make them available to the public. It’s a new market. The history of economics is the history of markets. We need to find a solution for the problem of writers, translators and editors, so that they can survive. I say you need to establish what I call a public market for private goods.
Perhaps Google’s idea can help solve the problem. You would have an international Internet book market, by which the creator would get a minimum of the revenue. As the audience for his work grows, his revenues grow. The more hits you get on the Internet, the more you make. Once, to get to the market, you had to go to the shuk, to Mahaneh Yehuda [Jerusalem’s outdoor market]; today you just need access your computer. Go to Google Books. It’s amazing. You can get to books you could never get to before. It’s like an Alexandria library of the 21st century.
It’s a matter of regulation, social regulation. Everyone who talks about deregulation is preventing this. If it serves the wider public, it’s seen as socialism, but if it serves a small elite, it’s good for the public?