Streetwise Professor

October 11, 2020

Facebook (and Twitter) Delenda Est

Filed under: Economics,Politics,Regulation — cpirrong @ 5:42 pm

I sent to a friend an article describing how WHO–yes, that WHO–is telling governments not to utilize lockdowns as their primary means of combatting Covid-19. I sent it via Facebook Messenger, because my friend lives in a rural area and that is often the only reliable way of transmitting messages: text and email often don’t work. The friend replied that the link didn’t work. I sent it via email, and it did work. Said friend then tried to post it to FB–but FB refused to post it.

So obviously, FB is censoring this information: it is a non-link as far as FB is concerned, consigned to the memory hole.

I’m so old that I remember when Facebook (and Twitter) censored articles that contradicted WHO. Now Facebook is censoring articles that contradict Facebook. Specifically, Facebook’s smelly pro-lockdown orthodoxy–even when that contradiction comes from WHO.

Facebook obviously loves lockdowns, and is going to do its damndest to prevent you from learning anything that might contradict that position.

This episode–and myriad others over the past couple of years–demonstrate that social media as it exists, and specifically as embodied by Facebook and Twitter, need to be subjected to common carrier non-discrimination regulations along the lines of what I advocated over 3.5 years ago.

There are the simplistic minded who claim that since these are private corporations, they should not be regulated. Thereby totally ignoring what I point out in my 2017 post: even in the halcyon days of classical liberalism, market power was understood to provide, under some circumstances, an exception to the general rule that private entities should be permitted to operate without restriction from government.

Some non-simplistic people–notably Richard Epstein, whose writings triggered my idea of applying common carrier regulation to social media–argue that the conditions for the exception do not hold. Even if Facebook and Twitter (and Google/YouTube, etc.) have dominant positions now, those positions are contestable. History suggests that market dominance is ephemeral, and a company that abuses its dominance will be displaced. More broadly, Schumpeterian creative destruction will, before long, consign current social media behemoths to the ash heap of history.

But how long “before long” is matters. It could be that in the long run, we are not just dead, but unfree. Or at least have suffered a grievous blow to our liberties, lost election by election.

In my opinion, Epstein underestimates the enduring impacts of network effects. I have studied exchanges–a classic beneficiary of network effects–for decades. I know how resilient they can be. Maybe Facebook (and Twitter, and Google/YouTube) will indeed be supplanted in 10 years. Hell, even 5. Hell, even 23 days.

What damage can they do in the meantime?

The suppression of information and opinion for days, let alone months or years, can have devastating effects. When the stakes in elections are so high, the distortion of the exchange of ideas and information that result from Facebook’s and Twitter’s and Google/YouTube’s censorship have very real consequences, even if someday, somehow, they will become historical curiosities.

Let’s just do some basic cost-benefit analysis. Lockdowns have caused the losses of trillions of dollars (and euros and yen and rubles and lira and what have you) of economic loss. Actions (such as Facebook’s censorship) that increase the likelihood of re-imposition of these lockdowns by even a small percentage can cause tens of billions, and perhaps trillions in economic harm. (I recall Ronald Coase’s statement that an economist can pay for his lifetime salary by delaying the imposition of a bad regulation by even a day.)

What is the cost of requiring social media platforms to operate on a principle of non-discrimination, and therefore allow supposedly sentient beings to sift through competing claims, rather than substituting their own judgments? Judgments, I might add, that are hardly disinterested. Do you think for a moment that Facebook and the other social media giants have not benefited from having people stuck at home, with little to do?

This issue also speaks to my post from a few hours ago. Yes, Zuckerberg (and other decision makers at Facebook) and Jack (Chase the Dragon) Dorsey and Sundar Pachai are arguably enhancing profits through their censorship policies (by creating a bored group of consumers with too much time on their hands), but they are also indulging their own personal preferences: to the extent that the latter is true, they are violating Friedman’s injunction. Moreover, since they have largely made the state their creatures, they can enhance their power (and wealth) by exercising huge influence over the transmission of information, and hence over public debate, and do so in a way that enhances their power, profits, and the achievement of their ideological goals. (Unpacking all these things is not easy.)

Meaning that actual policy and regulation are likely to deviate grotesquely from any “public interest” standard. Public interest would dictate, at the very least, subjecting Facebook et al to very limited restrictions, such as non-discrimination requirements. Requirements that they operate as open platforms (which could benefit from network effects, btw) and not discriminate or censor on the basis of viewpoint. But for myriad reasons, these social media entities view such restrictions as an anathema, and political economy therefore suggest that such restrictions will never be imposed.

Which makes it tragic, to say the least, that those who claim to advocate liberty shrink from constraining its most deadly enemies.

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20 Comments »

  1. Sorry, but the Latinist in me wants the title to read: Delendae Sunt

    Comment by Cole Kendall — October 11, 2020 @ 5:52 pm

  2. @Cole–Not a Latinist. I am adopting the common representation of Cato’s imprecation against Carthage.

    Comment by cpirrong — October 11, 2020 @ 5:54 pm

  3. The Stigler Center has had continuing conferences and academics debate this. It’s fascinating. Under Bork’s antitrust ruling, FB/Google/Twitter etc are “free”; and since the consumer is getting a lot of utility from it they shouldn’t be regulated. Of course, it all depends on how you input the things that go into “free” and the opportunity costs associated with it.

    I was initially against regulating anyone. I can see room to regulated them in some fashion, but I am not smart enough to figure out exactly how to increase competition. It also depends on which competition-ad spend? Eyeballs? Information disemination?

    I don’t care who is running the government, I doubt they can do it in a manner that brings competitive markets into the picture.

    Comment by Jeffrey Carter — October 11, 2020 @ 6:05 pm

  4. Good post and agree,
    Chances are slim, given that the US political class is highly dependend on donations from big corporations – and big tech has by far the most Money. (would it not be more accurate to classify ths as an oligarchy, rather than Democracy?)
    I mean, if it did not happen back in 2016 when Trump won (and I thought he might go after them, instead of promoting stock prices), why would it happen now?

    Comment by viennacapitalist — October 12, 2020 @ 3:04 am

  5. “Maybe Facebook (and Twitter, and Google/YouTube) will indeed be supplanted in 10 years.”
    Not only that, but there is no reason to think that the services which replace them will behave any differently once they themselves achieve a dominant market position.

    Comment by HibernoFrog — October 12, 2020 @ 7:52 am

  6. I’m so old I can remember all the way back to 2016 when the American (and British) right were the principal beneficiaries of Facebook’s & Cambridge Anayltica’s algorithms. It’s funny how you complain when all of a sudden they all seem to be working against you. And don’t forget there have been new entrants who have significantly changed the SM landscape. Unfortunately for the US many are Chinese owned.

    Comment by David Mercer — October 12, 2020 @ 10:39 am

  7. Lockdowns have caused the losses of trillions of dollars (and euros and yen and rubles and lira and what have you) of economic loss.

    So have the impositions of climate hysteria. All for nothing.

    Comment by Pat Frank — October 12, 2020 @ 10:46 am

  8. Somehow your comment made me think of this.

    Comment by cpirrong — October 12, 2020 @ 12:16 pm

  9. @David Mercer. Please do try to keep up. Or perhaps you haven’t noted that the ICO has said that all the stuff about CA was absolute bollocks.

    And I have been advocating regulation of social media companies since before you had a brain. Which, frankly, would be true if I did so a nanosecond ago. Or, if I were to do it next week. Or next month. Or next year.

    Comment by cpirrong — October 12, 2020 @ 12:22 pm

  10. CA. Meh, whatever. Unregulated so they could do what they want, I guess. Maybe Nix was just bullsh*tting when he claimed he’d met Trump on many occasions.

    And despite all Facebook’s changes, a metric tonne of QAnon bollox still seems to be getting past their censors. Weird that.

    Comment by David Mercer — October 12, 2020 @ 1:21 pm

  11. Seems credit for the title should be given to Ben Hunt at Epsilon Theory, who popularized the modern twist on Cato’s slogan in the context of Facebook.

    Comment by James Lovely — October 12, 2020 @ 6:20 pm

  12. At the risk of stepping on a landmine, can anybody share the reason for all the hate between The Prof and David Mercer? I tried searching, but Google says that “David Mercer” is dead. Twice. So I guess I’ve got the wrong one… And from the limited view I have from the comment section on this site, I haven’t found either of them to say anything particularly unreasonable…

    Comment by HibernoFrog — October 13, 2020 @ 5:29 am

  13. @Hiberno Wot, I’m like double dead?? Blimey, that sounds serious. Actually I’m not quite certain what set Craig off this time around – maybe it’s because he thought I called him a homeopath or something in relation to another of his posts. Or maybe it’s that time of the month/election cycle? For someone who is evidently such a Python aficionado he sure doesn’t like to be on the receiving end of some British banter (a clue for you).

    Comment by David Mercer — October 13, 2020 @ 7:23 am

  14. @David:

    Quite so, I’m afraid:
    – David Mercer, Welsh television sports presenter, Died: August 27, 2020
    – David Mercer, Playwright, Died: 8 August 1980
    Presumably the afterlife has internet access for you to keep posting 🙂

    In hindsight, I should have gone straight to Wikipedia’s disambiguation page:
    https://en.wikipedia.org/wiki/David_Mercer

    So, of the listed David Mercers still alive, we have: An Olympic weightlifter, a cricketer, a skier, a racing driver and a technical writer who also does online-entrepreneurship blogging.

    The last entry seems most likely (especially given how much tech people tend to like Monty Python), but nothing jumps out as saying that these two guys are seriously not going to get along… anyway, I’ll stop poking my beak into other people’s business now…

    Comment by HibernoFrog — October 14, 2020 @ 2:47 am

  15. HFrog, most likely the option is “none of the above”. Considering banality of the leftie views of the resident Mercer, he doesn’t merit his own Wiki page.

    Besides, his name might not be David Mercer at all (just like my name isn’t my blog moniker). Even if it is, “what difference, at this point, does it make?”(c)

    Personally, I consider him a masochist – he gets well-deserved punishment here every time he shows up, and continues coming for more. Ежики плакали, кололись, но продолжали жрать кактус

    Comment by ETat — October 14, 2020 @ 9:17 am

  16. Who here has a Wikipedia page?? Do you, whoever you are? Does Craig even?

    For the record this really is my name. I’m more than happy to stand by my comments, I’ve absolutely nothing to hide. On which note, it does baffle me why the vast majority of commenters hereabouts use pseudonyms rather than their actual names. I have a theory about this. My view is that most of these are actually normal, decent people in real life, but use this blog to secretly act out their little right wing fantasies. I can imagine their other halves calling out to them when they’re locked away in their studies or wherever: “Darling, you’re not on that SWP website again are you? You know what your doctor said about that! Why don’t you watch some videos of puppies being bludgeoned on Youtube instead?”

    Anyhow, dragging the blog back on topic (its not all about me you know), I see Facebook have now banned posts relating to Holocaust denial. Some of you may or may not see this as a good thing. And what’s this I’m hearing about that Hunter Biden story & Twitter? Intrigue on intrigue.

    Comment by David Mercer — October 14, 2020 @ 3:25 pm

  17. David Mercer is simply a troll, actually a pretty good one with respect to the modern internet era anyway. He is very good at pushing our hosts buttons. Although to be fair to the professor, accusations of academic dishonesty and being a Krugman-esque shill is likely to piss most normal people off.

    As to why do people pay anonymously? I am still trying to decide if he is trolling or is simply that dense to not know why. My guess is he’s just trolling as no one can be that dense and not be a politician or journalist or have a measurable effect on local gravity.

    Comment by Anymouse Cowherd — October 14, 2020 @ 10:32 pm

  18. I wonder if the flagrant censorship by FB and Twittet is actually their way of lobbying for regulation, as incumbents are usually prone to do in order to stifle upstarts and erect barriers to entry.

    Comment by Ivan — October 15, 2020 @ 1:42 am

  19. To me, software giants cannot be placed in the category of full-fledged private entities which run their business on their own. Their business model relies on the copyright, IP rights, etc., that is on the artificial monopoly created and enforced by governments. Just imagine that someone holds the monopoly rights on the concept of paper, and decides which newspaper is allowed to purchase it. It would be an undisputable totalitarian censorship supported by state but ostensibly not by state, and thus legally permissible. What we have in the social media universe today is a close approximation of this imaginary case.

    Comment by Boris Lvin — October 15, 2020 @ 7:40 pm

  20. @Anymouse: That was going to be it from me (at least on this thread) but your comment demands a reply. Firstly, I have never impugned Craig’s academic reputation; I honestly couldn’t be less interested in his professional pursuits. I recall I did call him out for spectacularly dropping the ball, in a professional sense, in response to one of his first posts on Covid, when he moaned about progressives or somesuch (“wot, nothing on the economics, y’know, your thang?”)

    Second, I’ve never called him a shill, but that said the body of evidence here does suggest he is rather. I might cut him some slack if he erred every once in a while, but he is so unremittingly – and irrationally – on-brand.

    Finally, I would avoid mentioning the K-word here if I were you. I guarantee that will have Craig and others reaching for their AR-10s

    Comment by David Mercer — October 16, 2020 @ 2:17 am

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