On Markets and Morals: The SEC, Apple, and Internet Pornography

The recent SEC scandal reminds us of the prevalence of pornography. Steve Jobs’ decision to ban pornography on the iPhone might provide a way forward.

It is an old trope that truth is stranger than fiction, but sometimes it even bites harder than satire. “SEC staffers watched porn as economy crashed” rang the headline, not in The Onion or for a skit on Saturday Night Live!, but in The Washington Post and on the websites of CNN and NPR above an Associated Press article. The article discussed a special report written by the Inspector General of the Securities and Exchange Commission that was shared with the press in late April. Some of the findings were quite dramatic: sixteen probes during 2008, the year of the financial collapse (eight times the previous year); an accountant blocked 16,000 times in a single month from accessing pornographic websites who nevertheless figured out how to bypass the filter; a senior attorney downloading so much pornography he filled his hard drive and then started burning DVDs; seventeen senior-level employees among the users, including at least one with a salary over $200,000.

The problem had surfaced several years back, with the Inspector General’s office issuing a memorandum in November 2007 recommending clarification of the prohibition against downloading pornographic materials at work, reminders of the penalties for doing so, and a revised warning message designed to pop up on a computer screen when the filtering software made a catch. A further memorandum the following March recommended adopting new technology to keep employees from turning off the filters, and while it is not clear from the website whether either set of recommendations was adopted, the memos do indicate that viewing pornography at the SEC did not consist of isolated incidents. Of course, just because the SEC captured the headlines there is no reason to suppose that work-time pornography viewing was any more common at the SEC than elsewhere in government. There are cases in the public record of such incidents happening at the Departments of Veterans Affairs, Transportation, and the Treasury. The 31 probes over five years among 3,500 SEC employees hardly suggests more frequent usage than the 16% of male employees in the general population who admit to viewing internet pornography at work, according to one web security firm.

Still, it is easy to see why the report about the SEC made news: Here is an agency of government that notoriously failed to prevent serious mishap in the business it was charged to regulate, now showing itself, or at least a significant number of its leadership, not only incompetent but distracted—and not only distracted, but obsessed. No one has proven a connection between negligence and pornography use, but neither have the violations been treated as merely involving private use of computers on government time, as though someone needed reprimanding for spending too much of the day on Facebook. One redacted report available on the web shows an employee confessing to having downloaded pornography, initially saying he did so occasionally to relieve stress, then recounting his shame and lack of self-control—a typical profile, according to what I have seen of the psychological literature. No one has said, though perhaps some have thought, that it might not be accidental that those who consume the exploitation of sexuality by pornographers failed to recognize the financial exploitation which, in various ways, seems to have been responsible for the crash.

But the SEC pornography scandal should prompt us to ask the larger question: What is the role of the market in pornography? Most pornography that depicts only adults is legal or permitted in most jurisdictions in the United States today. This is due in part because the Supreme Court narrowed the definition of obscenity in the 1960s and accorded First Amendment protection to sexual expression outside those narrow limits. It is also partly due to the fact that, since the Clinton Administration, very little has been done to prosecute pornographers whose materials did not involve children. Despite these facts, there is still enough shame and secrecy attached to the business that reliable estimates of its size are hard to discover. One recent study suggests that the market for internet pornography alone sustains a $2.5 billion per year industry—and this when upward of three-quarters of pornography users report they access only what is available for free. There are several peculiarities to note about the pornography market. If illegal child pornography is sold alongside permitted porn, then the whole marketing arrangement probably includes some elements of “black market” behavior. At least it can be noted that, unlike many other markets, there is little in the way of a “mixed market” in pornography, where government subsidies or incentives structure what is bought and sold. In some respects the market apparently operates like other markets where the product induces addictive behavior—and thereby gives rise to a secondary market for materials that can break the addiction.

Curiously, perhaps because free market ideology reemerged in the immediate aftermath of the sexual revolution, modern market libertarians tend to take a laissez-faire approach to pornography. Ludwig von Mises himself had written, “Economics is a theoretical science and as such abstains from any judgment of value,” and for such economists it is a standard exercise to calculate how a market in sex, i.e. prostitution, would operate. In America that market is, except in a county or two in Nevada, still suppressed, but the market in pornography is the closest thing. Indeed, regarding the internet, a sort of lore has grown up that, from its beginnings, the market for pornography has driven technology’s pursuit of better images and hence of quicker and more powerful computers and more extensive bandwidth. It certainly seems as though, in the individuals accustomed to seeking all sorts of gratification through their computers, the use of pornography to “relieve stress” is a perfect, if perverse, denouement.

Coincidentally, during the week that saw the announcement of the report on pornography use at the SEC there also surfaced a comment from Steve Jobs, CEO of Apple Computers, defending his company’s ban of pornography “apps” for iPhone and other Apple products. Apologizing to a user for mistakenly rejecting an app with a controversial political cartoon, Jobs added, “However, we do believe we have a moral responsibility to keep porn off the iPhone. Folks who want porn can buy an Android phone,” (Android is the comparable product of his new competitor, Google). The Wired article relaying the comment interprets “Jobs’ opposition to porn [as] loud and clear,” but adds no reasons from Jobs for his opposition: Is his a moral objection to pornography, a purely aesthetic distaste, concern about his company’s branding, concern about its market with the parents of young teens getting their first phone, or some combination of all these? The response of many geeks was instantaneous and predictable: Don’t tell me what I can and cannot watch, that’s why I’ll never buy Apple, “The web is about openness. It’s about freedom.” For whatever reason, Jobs seems unyielding and his company vigilant. The Sports Illustrated swimsuit edition passes muster, even Playboy without nudity and a reader for the iPhone that allows downloading of the ancient Kama Sutra are allowed, but try to sneak pornographic images into an approved app and iTunes will cut you off.

What are we to make of all this? First, the report of heavy pornography use at the SEC is an important reminder that the vices to which human nature is subject do not dissolve when a person enters government service, and thus that the temptation to respond to every problem with a call for expanded rules and regulations ought to be resisted. There is not today a separate culture of government, devoted to virtue, while the market is flooded with vice. Second, one can applaud the SEC Inspector General for his investigation, and particularly for the clear condemnation of downloading pornography or other sexually explicit materials as a specific wrongful use of government computers, not only a generalized waste of time. Third, one can commend Steve Jobs for steadfastly refusing to allow Apple to become a platform for easy access to pornography, and commend him as well for showing that this can be done through determined business leadership, without recourse to government regulation that can threaten legitimate freedom and impose its own social costs.

In the end, though, these policies need to be defended by reasons—in light of the clear exploitation involved in the creation of pornography, of the harm done to individuals who use it and to their families, and of the larger social costs—even when the policies result in the voluntary action of private companies rather than in government coercion. And their defense will draw on the same ideas that defend human freedom itself: an account of the integrity of the human person, of his status as an intelligent and therefore moral being, and of the enhancement of human prospects when people live in a community and share in its civic life. If this is right, then the repair of the breach between social conservatives and libertarians is not just a matter for coalition-building and negotiation, but an occasion for serious reflection and theoretical development. The recovery of a healthy market and the restoration of healthy public morality are not two separate aims but two dimensions in the quest for human freedom. To form the capacity to choose is not to suppress freedom, but to empower it.

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