Book Notes

In 1980, the U.S. Congress passed the Bayh-Dole Act.

Universities haven’t been the same since.

The Bayh-Dole Act gave universities title to federally funded inventions developed on campus, and encouraged schools to enter into exclusive contracts with big companies — especially but not limited to pharmaceutical giants and biotech firms — to develop and market those inventions.

The idea was to facilitate the transfer of government-funded research to the marketplace. Whether such transfer now takes place more effectively than it did under the prior regime — when federally funded inventions were made available on a non-exclusive basis — or than it would under other possible models, is anything but clear.

What is clear, Jennifer Washburn shows in University, Inc., is that Bayh-Dole has wreaked a transformation of universities, and for the worse.

In probably the best account of the corporatization of universities over the last quarter century, Washburn shows how academic science has been distorted and corrupted. Bayh-Dole and related changes altered the entire culture of academic science, so that there is much diminished emphasis on openness, sharing of information and collaboration, and much greater emphasis on secrecy, proprietary information and the bottom line. Professors especially in the biological sciences are deeply enmeshed in the corporate sector, through licensing, consulting and ownership arrangements that give them a financial stake in seeing products get to market (and that high prices are charged for them). Universities have reoriented themselves, as they enter into major corporate-sponsored research deals and embrace a proprietary mindset and seek to patent — and gain exclusive control over — as much knowledge as possible.

Washburn highlights the example of the University of Wisconsin and stem cells as emblematic of the current, troubling state of affairs. A University of Wisconsin professor — working under a federal government grant — derived stem cells from monkeys, and the university’s technology licensing arm obtained an exceptionally broad patent on the discovery. The patent covered all stem cells from all primates, including humans, and the method for isolating them. Wisconsin then licensed the patent exclusively to the Geron Corporation. The extent of the university’s control over stem cell research intensified after the Bush administration announced public funding would be available only for research on stem cell lines developed prior to 2001 — all of them covered by the Wisconsin patent … which had been obtained with federal funding. Eventually, under severe pressure — and facing the prospect that the government might even exercise dormant rights to issue its own licenses to the technology — Wisconsin and Geron revised their arrangement to make stem cell lines more widely available.

The private capture of public investment, and the distortion of science that follows from limiting access to research tools and fields of knowledge to one or a limited number of parties, are among the most serious of harms following from the corporatization of the university. But they are not the only ones.

Washburn details how pervasive conflicts of interest threaten good science — with an increasing portion of the professoriate maintaining a financial interest in showing “success,” test results are inevitably biased. The pool of independent critics at universities is drying up — even though many academics trade on neutral-sounding university affiliations to defend the interests of companies or industries with which they have financial entanglements.

Meanwhile, education investments are being skewed by the effort at schools throughout the country to replicate Silicon Valley, which benefited from inventions at Stanford. States are pouring money into applied science centers, without recognizing the broader factors that gave rise to Silicon Valley — and while underinvesting in the general education and community cultural assets that helped make Silicon Valley possible. And, at universities, the humanities — and almost any discipline that doesn’t offer the fantasy of some huge payday for the school — are being cheated of funding, leaving universities, and their students, intellectually poorer.

In Eat Here, author Brian Halweil persuasively argues, “Yes, it does.”

There is a corporate logic to finding the cheapest place to grow any particular food, growing lots of it in that one place, and shipping it all over the world. If transport costs can be contained, if technologies are available to slow ripening or rotting processes, then this approach can make cheap food available in vast quantities. Cheap food available in vast quantities is not a trivial achievement. The global food trade offers other benefits, too, such as making otherwise exotic foods available, and making seasonal foods available year-round.

But even on economic terms, the scales have been tipped too far in favor of the corporate-dominated global food trade as opposed to local production, Halweil contends. The price of internationally traded food does not include its very real costs: increased global warming thanks to the huge amounts of energy wasted on transporting what might otherwise be procured locally, the environmental consequences of the pesticides required to support plantation agriculture, and subsidized fuels and chemical inputs.

There are, as well, costs that cannot be so easily monetized: the destruction of small farms, in rich and poor countries, in favor of big plantations, and the erosion of food diversity and unique local food cultures.

“The transcontinental lettuce wowed supermarket shoppers with its unexpected appearance and novelty,” Halweil writes. “But it also eliminated local lettuce growers, rendered salads bland and uninteresting and sucked up more fossil fuels than the planet can afford. A few short decades after its big splash, it’s time for the transcontinental lettuce to retire.”

Eat Here is part careful analysis and diagnosis of the harms of the corporatized and globalized food trade, and part celebration of a cornucopia of new initiatives, in the United States and around the world, to revitalize local food growing and food diversity.

Halweil tells stories of operations like Burgerville in Washington state, a small chain that serves cheeseburgers with beef from an Oregon co-op and cheese from a local creamery. Fish and chips feature Northwest Pacific halibut. Pickles come from a local maker. The menu changes with the seasons, reflecting what is locally available at the time.

It’s not enough to celebrate these emerging projects, Halweil knows. They face an uphill fight. On the one hand, they must create new institutions to present local foods to regional consumers, and they have to develop a consciousness among consumers that places value on localism and food diversity. On the other hand, they have to overcome the corporate biases in favor of the global food trade: the distribution networks of Wal-Mart and the like, subsidies that make traded food appear cheaper than its actual costs, and pressures from international financial institutions and biases in international trade rules that favor exported food at the expense of eating from the local farm.

Kurt Eichenwald’s Conspiracy of Fools is advertised as a Grisham-like account of the Enron scandal.

That maybe goes too far, but there’s no denying the book is a good read, albeit a bit long. New York Times reporter Eichenwald writes in the Bob Woodward style, as if he were present at all of the meetings, hallway encounters, dinners and casual encounters he recounts. Thanks to his strong reporting, extensive interviews and careful review of the now voluminous legal record related to the Enron scandal, he can pull this off.

The result is a compelling day-by-day account of the intrigue — the deceits, schemes, corner-cutting and crimes — that led to the Enron collapse. In Eichenwald’s version, the guys who thought of themselves as the “smartest guys in the room” weren’t nearly so bright as they imagined. Hence the title of the book.

In Eichenwald’s story, top executives Ken Lay (chair and CEO) and especially Jeff Skilling (president and briefly CEO) and Andy Fastow (chief financial officer) were very good at inventing intricate financial maneuvers that puffed up the value of Enron far beyond its actual worth. Lay and Skilling presided over a culture that emphasized envelope-pushing and creative financial schemes to create the appearance of profit. Fastow thrived in the environment, but took it another step, Eichenwald contends, effectively ripping off Enron through complicated self-dealing.

Everyone who should have caught Fastow’s thievery and more generally the accounting tricks that inflated Enron’s stock was complicit in some way, choosing not to scrutinize or actively signing off on shady deals. Eichenwald portrays Enron’s board as a rubber stamp; Lay as a corporate politician who delegated most deal-making to Skilling; and Skilling as an overly aggressive deal-maker with a blind spot for Fastow’s criminality. The accountants at Arthur Andersen were enablers of wrongdoing at Enron, signing off on financial scams that ranged from dubious to criminal, all in an effort to maintain their huge contract with Enron.

Eichenwald’s version of the story is soft on Ken Lay and Jeff Skilling — many Enron-watchers think unjustifiably so.

But there is an even more pervasive problem with the book, which follows in no small part from the decision to write it in the style Eichenwald chose. Although they are mentioned, there is no analysis in the book of the structural factors that enabled the Enron scandal, and a reader is left with the perspective that, indeed, the whole debacle can be considered a conspiracy of fools — the unfortunate outcome of a series of stupid decisions by foolish executives.

That approach fails to point to the many broader developments that made the Enron disaster possible, among them: the immunities from lawsuits granted accounting firms in the mid-1990s, which made them much more willing to okay aggressive accounting; the deregulation of energy markets that made it possible for Enron and other energy firms to manufacture the California energy crisis; the financial deregulation that enabled financial firms to breach historic divisions between investment banking and investment analysis; the stock market bubble; and the increased role of financial market demands for demonstrations of short-term profit increases.

— Robert Weissman