A Future Perfect: The Challenge and Promise of Globalization

by John Micklethwait

  Hirsch has pushed Vivid relatively upmarket. Vivid’s flagship products are the thirty feature-length films that it makes each year, shot on film rather than video and with budgets of about two hundred thousand dollars, an unheard-of sum in the porn world. Vivid employs its own in-house director, Paul Thomas, to give its films a consistent “Vivid feel.” (Thomas, himself a veteran porn actor, appeared as the apostle Peter in Jesus Christ Superstar.) Most Vivid films feature presentable sets and exotic locations rather than grimy bedrooms and moldering hot tubs. And most feature something that is surprisingly rare in the porn business: beautiful women.

  Hirsch managed to get a lock on the prettiest girls in the business by reviving an old entertainment practice: the studio system. Vivid made its first big star, Ginger Lynn (Hirsch’s erstwhile girlfriend) into its first “Vivid Girl.” There are now nine Vivid Girls, who have typically signed one- to three-year contracts to appear in about six films a year. In exchange, they get some kind of security; a guarantee of exactly what they will and will not do on camera (don’t ask); and heavy promotion by Vivid’s powerful publicity machine through fan clubs and websites. (Kobe Tai’s hobbies, we learn, are “singing country music and Disney tunes”; Tia Bella likes to spend time with her five adopted pets.)

  Most porn girls harbor secret dreams of crossing over into the mainstream world; their chances of doing this, though pretty small, are probably higher with Vivid than with anyone else. Vivid Girls, who are encouraged to wear a special Vivid necklace at all times, have had cameo roles in proper films and have appeared, clothed, in various advertisements. Vivid’s publicity agents, who tend to have backgrounds in the music business, are also good at introducing them to rock bands. In the meantime, while they wait for the phone call from Warner Bros, asking them to step in for Meg Ryan, the girls can command a premium on the lucrative stripping circuit, earning as much as twenty thousand dollars a week. There is even a certain amount of camaraderie attached to being a Vivid Girl. Hirsch and many of his girls are vocal supporters of the hard-line animal-rights group, People for the Ethical Treatment of Animals.

  In terms of “thinking global but acting local,” Hirsch is arguably ahead of the mainstream studios. The most that respectable Hollywood does in the p. 82 way of fine-tuning its films for different markets is beeping over a few words and employing, for example, Asian rock bands to compose local anthems. Vivid recuts (and sometimes reshoots) its footage to produce hard- and soft-core versions of the same film for different markets. It also allows foreign partners to edit its films for local content. The Japanese, for example, still have a prohibition on showing pubic hair. The result, according to Hirsch, is that Vivid uses its footage even more thoroughly than the Plains Indians used the buffalo.

  The other thing that stands out about Hirsch is that he understands the importance of technology. It is one of the oddities of the consumer-electronics industry that the snazziest products often have their origins in the world’s oldest profession. The porn industry’s embrace of the videocassette helped guarantee the technology’s commercial success. Today, it is doing the same for DVD and the Internet. Vivid is not only cranking out DVDs faster than any other studio but also blazing trails in using the medium’s special capabilities, such as allowing a viewer to watch a single scene from several angles. Internet peep shows allow cybervoyeurs in one country to give instructions to models sitting in another. Vivid, a pioneer in the questionably named field of cyberdildonics, has even designed an electronic suit that allows couples in different countries to “interact” to their mutual satisfaction—perhaps the final delocalization of sex. “You always want to expand your business,” enthuses Hirsch. “You always want more.”

  Porn sans Frontiers

  With its DVDs and vertical integration, Vivid is perhaps an extreme example, yet even at its most basic level the sex business has been profoundly transformed by globalization. Take the growing ease with which people and businesses can cross borders, either legally or illegally. In poorer countries, international tourism and business travel is making prostitution spectacularly rewarding: Women in Russia and Eastern Europe can earn several times the average weekly wage for a night’s work in an exclusive hotel. Indeed, sex was one of the first industries to feel the effect of the fall of the Berlin Wall. In many parts of Eastern Europe, industries that had been buried underground came bubbling to the surface. In the meantime, the Western European sex markets were flooded by Eastern European sex workers, driving down wages. In Kiel, Germany, the standard price for a prostitute remained fifty marks (thirty dollars) from 1992 to 1998, a substantial drop in real terms.[3] At the other end of the market, rumors abound in Manhattan p. 83 of a group of former KGB women, trained for “honey-trap” activities, who have now aimed their charms at some of the city’s wealthier citizens.

  It would be an exaggeration to say that the price of prostitution is being fixed by a global labor market, though it is certainly having an effect. Besides, the ease with which people can now cross borders is as nothing compared with the ease with which goods can. Sex entrepreneurs have rushed to outsource and to take advantage of the standard laws of comparative advantage. China has become the world’s biggest producer of sex aids. Most Western European producers of sex videos use Eastern European actors for the simple reason that “they will do more for less.” Budapest has become the biggest center for the production of pornography in Europe, eclipsing such old stalwarts as Amsterdam and Copenhagen. Scott Stein, the head of SMS Promotions, based in Playa del Rey, California, offers something called XXX-treme vacations, which promise, among other things, a ringside seat at the making of porn films in some exotic location or other.

  The industry may be about to be given a big push by yet another powerful force: the global capital markets. Several porn firms, including America’s New Frontier Media and LodgeNet Entertainment and the Barcelona-based Private Media Group, are listed on American exchanges; Germany’s Beate Uhse, one of the world’s biggest sex-store chains, is listed in Frankfurt. Hirsch is coy about whether he will take Vivid public. He argues that Wall Street will have little patience for an undiversified pornography company, particularly as videotape faces such an uncertain future. But he is devoting a lot of effort to making sure that Vivid diversifies itself.

  In the end, however, the biggest force driving the current hectic globalization of the sex industry remains the Internet. Forrester Research of Cambridge, Massachusetts, calculates that the Internet porn business is already worth one billion dollars a year and is set to get much bigger. The medium removes at a stroke the two biggest obstacles to selling sexual images and services: shame and ignorance. Anyone planning a business trip need only look at the World Sex Guide, an Internet site, to find detailed reviews of brothels, escort agencies, and nightclubs in hundreds of cities around the world. It also makes it possible for people to bypass regional censors, getting access to images from anywhere on the planet. The girls on the Vivid site who cavort at their customers’ pleasure are based in Amsterdam.

  What is the result of all this? From a consumer’s point of view, globalization is simple enough: You can get more of what you want when you want it than ever before. But the impact on producers is rather more mixed. While the upper end of the porn business is consolidating, the seamier parts of it p. 84 seem to be fragmenting. Low barriers to entry mean that there is an ever-changing group of new players. Even more than in other walks of life, in the sex industry globalization seems to be driving a wedge between the successful and the unsuccessful. In the prostitution business, some women (particularly good-looking ones in poorer countries) are making quick killings. Others, however, are being forced to perform ever more degrading acts for ever less money. Some of the newest pimps in the business—particularly the Russians—have reputations for astonishing violence and brutality.

  Many other critics would go further, arguing that globalization is the ugly stepmother both of child-porn sites on the Internet and even of AIDS, a truly global p
lague. Yet it is plainly not all bad. Even with sex, globalization increases transparency and helps spread generally tolerant standards. The sad truth seems to be that the nastier customers of the sex industry have always been prepared to travel, and national boundaries have often provided them with protection. For Western child molesters, places such as Bangkok and Manila have long been areas where you can get away with murder (or its nearest equivalent). Now they stand a much higher chance of being exposed by authorities cooperating across borders.

  At the other end of the scale, globalization has helped force governments and society to rethink their attitudes toward adult sex, usually in ways of which most liberals would approve. Intolerance toward homosexuals is still needlessly prevalent in various parts of the world, but legal discrimination is becoming rare; bigotry against your own citizens is hard to uphold when you are trying to sign a trade deal with an openly gay minister from another country. Similarly, globalization is one reason why several Western countries have finally begun to discuss legalizing prostitution, bringing it off the streets, where it is often dangerous and unhealthy, to safer, cleaner, licensed brothels. If, for instance, Sheffield in Britain starts to license massage parlors, with the permits being subject to medical checks on the masseuses, it will be partly because cities in the Netherlands and Germany have done the same, with a general improvement to all concerned.

  The Global Way of Death

  There is every reason to think that the death business is more immune to globalization than the sex business is. Different cultures deal with death in profoundly different ways. Ireland has its alcohol-fueled wakes, New Orleans its brass bands and wailing women. In India, funerals can be a riot of noise and color. In England, they tend to be muted affairs, with the bereaved p. 85 hopelessly embarrassed about their emotions. Death is an occasion not just for meditating on ultimate things but also for celebrating what binds us to our kin and kind. Nobody—not even the most dedicated champion of globalization—wants to be buried by an anonymous global corporation.

  Those corporations are colonizing death nonetheless. The biggest of these is Houston-based Services Corporation International (SCI), the largest provider of “death care services” in the world. SCI spent the mid-1990s expanding aggressively, taking over France’s largest funeral chain and two of Britain’s largest chains. At its peak in 1998, SCI owned some 3,420 funeral-service locations, 433 cemeteries, and 191 crematoriums in twenty countries and on five continents. The empire includes both the funeral parlor that buried Elvis and the one that buried Sir Winston Churchill, suggesting that globalization has an odd way of uniting the dead as well as the living.[4] In 1998, SCI performed 11 percent of all the funeral services in the United States, 14 percent of those in Great Britain, 25 percent in Australia, and 28 percent in France, a country that is normally highly resistant to American corporate imperialism.

  Others followed SCI’s lead. By the same year, the British Columbia-based Loewen Group owned far more funeral homes and cemeteries in the United States than it did in its native Canada. It also operated in Puerto Rico and in the United Kingdom. Stewart Enterprises, from New Orleans, relied on its operations in Latin America, Europe, and Australasia for a fifth of its profits.

  In a few cases, this Americanization of the graveyard has come about through the construction of new parlors, but for the most part it has been through acquisition. There is no point in saturating one of the world’s most mature markets. Acquisition also allows foreigners to overcome the two biggest barriers to entering new markets in this business: heritage and tradition. The death business has traditionally been dominated by small family businesses that have put down roots in a community over several generations. Customers would find powerful consolation in the fact that the same family that buried their grandfather was now burying their father. It is also a nice, safe business to be in. Dun & Bradstreet calculates that the average business failure rate in the funeral industry in 1995 was thirteen per ten thousand, compared with eighty-two per ten thousand for American business as a whole.

  In some cases, parlors have been driven to sell by the need to solve their own problems with succession or estate planning. Others have simply been tempted by the possibility of making, so to speak, a quick killing. The big firms have been willing to pay above the market rate, too, because they think p. 86 that they can reap economies of scale through “clustering.” Learning from an idea pioneered by McDonald’s, which centralizes its food production and management, SCI and its competitors first buy up a carefully chosen selection of funeral homes, cemeteries, flower shops, and crematoriums in a given metropolitan area. They then cluster everything that goes into making a “fulfilling death experience” into a central depot: hearses, limousine drivers, dispatchers, embalmers, marketers, and a small army of clerical workers.

  Clustering does more than just allow firms to control costs: It allows them to endure fluctuations in the local death rates, which often swamp smaller companies, and to plan for the future by marketing prearranged funeral services. Further, SCI does not sacrifice the local roots that took so many years to establish. When SCI buys, for example, Johnson’s Chapel of Eternal Rest, Jessica Mitford noted in the final edition of her classic The American Way of Death, it keeps not only the name “but also Johnson himself, now installed as salaried manager, thus ensuring continuity of recognition and goodwill.”[5]

  This is not to say that the corporate owners leave local traditions untouched. Their technique is to persuade other countries, imperceptibly but relentlessly, to embrace the American way of death. Jessica Mitford quoted an anonymous British informant about how SCI gradually rearranged a business after taking it over. For six months, nothing really changed. But then all the employees were invited to a smart Kensington hotel, where a new range of coffins was unveiled and the arts of salesmanship explained. The goal is to steer people away from cheaper options such as “typically English-looking, pleasant coffins” and cremation (a more popular option in Britain than in the United States) and persuade them to go for more expensive options.[6]

  Just as in other industries that are globalizing, it is an uneven process. The big groups got carried away with their own rhetoric. The race between SCI and the Loewen Group to snap up assets turned into a disastrous bidding war, fueled in part by a bitter personal rivalry between William Heiligbrodt, SCI’s boss, and Raymond Loewen. Both men were eventually forced out after SCI’s shares plunged and Loewen filed for chapter 11 bankruptcy.

  Yet there is every reason to think that this is nothing but a pause in a longer-term trend toward a more global industry. The five publicly traded companies still account for only 20 percent of the death-care industry. And clustering does offer genuine economies of scale. Loewen has been reborn as the Alderwoods Group; SCI is back on the acquisition trail, albeit in a less aggressive way. And Stewart Enterprises—which was much more cautious p. 87 than its competitors in the heyday of consolidation, refusing to pay more than eight times operating earnings for a funeral home at a time when SCI was happily paying nine—is now buying again. The postwar baby boomers are rapidly approaching the ages at which their minds begin to turn to funeral plots rather than new sports-utility vehicles. It would be appropriate if the members of the generation that has led the current wave of globalization made their final trips in the company of a few multinational corporations.

  Globalizing Compassion

  One good indication of how little the welfare state has had to do with globalization lies in the way that the concept means completely different things to different people. For the Swedes, virtually everything the public sector does is part of the welfare state; Americans tend to think of it as merely providing food stamps for the poor. In our discussion here, we will use the British definition, under which the welfare state involves four basic social services: health care, unemployment pay, pensions, and education.

  In its many incarnations, this four-headed monster and miracle has been the antithesis of global capitalism, provide
d by governments rather than by businesses and bound up with the process of building nation-states. Most people would probably like to keep things that way, just as they would like to keep “the people who buried Elvis” out of their local funeral parlors. But the logic of globalization is beginning to affect the provisions of welfare nonetheless.[7]

  Otto von Bismarck, the architect of modern Germany, pioneered nationalized compassion when he introduced state pensions in 1889. Thereafter, citizens increasingly looked to their governments to provide them with “social insurance”; governments, conversely, increasingly used social insurance to endear themselves to the newly enfranchised masses. Before the First World War, the British Liberal government that Keynes so admired introduced such programs as free school meals for needy children and old-age pensions. In the 1930s, America’s Social Security, a product of the New Deal, served similar aims. Schools also came to be seen as some of the most powerful instruments of nation building. Governments coopted or forcibly nationalized many of the voluntary organizations that had provided education in the past. They then regulated what was taught in schools with the goal of creating properly educated national citizens.

  The provisions of the welfare state are so enormously popular that prudent governments regard them as the third rail of democratic politics, too p. 88 dangerous to touch. But such systems are enormously expensive, too, eating up the bulk of government spending throughout the OECD and lurching from one crisis to another. These crises have been so severe that politicians now are trying to halt the seemingly irreversible expansion of governments into every aspect of social welfare. Further, they are beginning to question whether personal security must inevitably be the responsibility of national governments rather than prudent individuals and global markets.