- Amazon is simply the best store that ever existed, by far, with incredible selection and unearthly convenience. The price: cheap.
Facebook, Twitter, and other social media let us socialize with our friends, comfortably meet new people, and explore even the most obscure interests. The price: free.
Uber and Lyft provide high-quality, convenient transportation. The price: really cheap.
Skype is a sci-fi quality video phone. The price: free.
Youtube gives us endless entertainment. The price: free.
Google gives us the totality of human knowledge! The price: free.
That’s what I’ve seen. What I’ve heard, however, is totally different. The populists of our Golden Age are loud and furious. They’re crying about “monopolies” that deliver firehoses worth of free stuff. They’re bemoaning the “death of competition” in industries (like taxicabs) that governments forcibly monopolized for as long as any living person can remember. They’re insisting that “only the 1% benefit” in an age when half of the high-profile new businesses literally give their services away for free. And they’re lashing out at businesses for “taking our data” – even though five years ago hardly anyone realized that they had data.
- History textbooks are full of populist complaints about business: the evils of Standard Oil, the horrors of New York tenements, the human body parts in Chicago meatpacking plants.
...go on...
- To be honest, I haven’t taken these complaints seriously since high school.
- and SCENE
That book's on my reading list because blackbootz recommended it. Having not yet read it, my understanding of the book is that it's not dissimilar from this post:
Which argues that college isn't about what we say it's about but what it's actually about is still so vital to society that we don't have much choice but to keep it about. It would not surprise me to find out that Bryan Caplan thinks we ought to do away with public schools because the proles don't need to know much more than how to dig ditches and polish shoes therefore preserve The Ivies for people who will go on to teach Economics at George Mason to other Alphas. I'm actually fine with that so long as we somehow re-jigger society such that you don't need to burn a c-note in order to lead a lower middle-class lifestyle. Take care of the middle and I don't care who's at the tippy-top.
But when you shrug off Upton Sinclair as your opening gambit, you DNF the race.
Well, I’d agree with the author on the basic premise that the internet is generally a huge boon for humanity. I’d argue that all the bad stuff that comes from it is really just bad stuff in human nature, and having a powerful tool to exponentially amplify human shittyness can make shitty stuff. The tool itself can also amplify good things though, so really it seems like the answer is to put some rails on this crazy train, which is exactly what the author is arguing against because he is completely failing to acknowledge the problem.
Is this guy seriously arguing that Big Data is a non-issue that no one should care about when it was just involved in very prominent election manipulation?
Like, his whole argument appears to be that we’ve been worse off in the past so we’d better apply absolutely no oversight or scrutiny into these tech companies—or golly we might imperil our chance at getting more cat pictures from aunt Maggie on Facebook. Could you imagine if these Golden Cornerstones of modern civilization became slightly restricted or -gasp- not free anymore? I mean, they’re free so they obviously just want what’s best for you. You’re such a populist to sneer at such a fine capitalist Gift. I mean, you did even know about all that data being collected about you a few years back so obviously it can’t be important.
I don’t see him saying that tech companies cause no negative effects, rather that the “huge boon to humanity” (as you describe the Internet) they enable is so large in comparison to the costs that it is ridiculous how e.g. #amazon is so often portrayed as a force of evil.
I don’t know why the author calls them populists, but I do think critics could save themselves a lot of angst by simply not patronizing the tech firms they criticize. Yet they often confess they can’t imagine life without Prime.
That's not the way monopoly works, though.
In a world without Amazon, I would have to go outside to buy shoes. There are a number of cloistered white people in my neighborhood; we consume shoes (and other goods, but let's stick with shoes). There is a local demand for shoes, that could be satisfied by a shoe store opening up in any one of the many shuttered storefronts. They could sell shoes to rich cloistered white people, they could sell shoes to brown people, they could sell shoes to cops and bus drivers. The economic need of my neighborhood to wear shoes would provide an economic incentive for someone to come to my neighborhood and sell shoes.
But in a world with Amazon, I can buy shoes directly from the Chinese gray market through a top-down Internet marketplace that is willing to profit five cents per pair of shoes so long as they sell all the shoes. Not only does anyone selling shoes on the Internet have to do it as cheap as Amazon, they actually have to do it cheaper because there's no real way to attract my attention other than by price since, as previously argued, there's nothing in meatspace to see. Ain't nobody signing a five-year lease for the right to attempt to profit against Amazon.
Thus I have no choice but to use Amazon to buy shoes.
Speaking seriously, there's a whole lot of disingenuous sleight-of-hand in the essay that disregards externalities as if they were a figment of the hippies' imaginations. Going down the list, Amazon already covered:
- Facebook, Twitter, and other social media let us socialize with our friends, comfortably meet new people, and explore even the most obscure interests. The price: free.
Facebook has co-opted earlier forms of online communication (mailing lists, newsgroups, etc) and replaced them with an "engagement-driven" hierarchy. Thus the "group" for my town has useful information about meetings and the like, but they're buried under flamewars over the homeless and raccoon memes. I cannot find out when we're meeting about the park without wading through 900 outraged comments for/against/about the homeless. Twitter, meanwhile, has turned communication into a battle over which side can "ratio" the other.
- Uber and Lyft provide high-quality, convenient transportation. The price: really cheap.
Uber and Lyft have spent about about fourteen billion dollars eliminating the taxi industry. Their prices, meanwhile, have increased 50% a year every year. It used to cost $30 to take a taxi to work. It now costs $28 to take a Lyft. The difference is the taxi driver had a license, was in a licensed car, and knew what he was doing. The Lyft driver is making less per mile than the IRS is reimbursing him and she only goes where her GPS tells her. She had to invest in the car (because you can't make any money at all without having something 2 years new or newer) and venture capitalists had to sink their money into the monomaniacal mission to annihilate a working class profession but I guess that's okay because I'm saving $2 on a 15-mile trip.
- Skype is a sci-fi quality video phone. The price: free.
Skype is an open-source video codec and an open-source audio codec transmitted across an open-source protocol wrapped in a proprietary wrapper that Microsoft paid $8.5b for so they could nudge you into their pay-by-month ecosystem. Public funds paid for the development of everything in Skype but it primarily exists now to prevent an open protocol that would do the exact same thing with better interoperability.
- Youtube gives us endless entertainment. The price: free.
Youtube has driven the cost of production so low that it has become far more effective as a disinformation engine than anything else. Low-income families used to sit their kids down in front of Mr. Rogers and Sesame Street (been there, done that, got the latchkey). Now they sit their kids down in front of Finger Family.
- Google gives us the totality of human knowledge! The price: free.
Amazon, for their part, is spending $700m retraining some of its employees. And good on 'em. Thing is, they're retraining a third of their employees so that they can do higher-tech jobs. What do you think will happen to the other two thirds?
And what do you think about the fact that Sears has lost more employees in the United States since 2006 than Amazon has hired?
My gripe with the author is this: if you’re going to argue about the cost of big data but ignore the elephant in the room, then you’re not making an honest argument. There’s no way this guy doesn’t know about Cambridge Analytica or Zuckerberg’s appearance before Congress etc etc. These are some of the key events which has everyone thinking that maybe the real cost of this data in the grand scheme is actually a lot. The direct cost to you may not be felt, but it may damn well shape the world. The author just grazes by this by saying since people didn’t think this way five years ago, it must not matter? This is basically the whole context for the issue and the author is hand-waving it away so he can frame it as naively as he could 5 years back.
I don't see where he is arguing about or denying the cost of big data, all he says is "five years ago hardly anyone realized that they had data." Do you disagree with this claim that most people were not very worried about their data before tech companies started finding ways to mine it for profit? In other words, the problem of tech companies assembling digital profiles of customers is a direct consequence of our use of their extremely popular services.
Even today, people say they want companies to collect less data, but most are not willing to pay for more privacy.
If your concern is election manipulation, this seems an inevitable side effect of any mass communication technology: television before the internet, radio before television, newspapers before radio.
But again, the author does not deny these negative side effects, he merely claims that the benefits are so great relative to the costs that the unrelentingly negative commentary about tech companies is unreasonable.
- I don't see where he is arguing about or denying the cost of big data, all he says is "five years ago hardly anyone realized that they had data."
A hundred years ago, hardly anyone in Indio realized that they had water. That does not mean that the data has no value, nor that the first person to recognize the value of an asset is entitled to that asset.
The study you link does not indicate that people aren't willing to pay for more privacy, it indicates that people aren't willing to pay for Google or Facebook. Every question there is about privacy is a "strongly agree" plurality except "I would like online services such as Facebook and Google to collect less of my data even if it means paying a monthly subscription fee." It doesn't demonstrate that consumers don't value privacy, it demonstrates that consumers don't value Google or Facebook.
It's almost as if they're forced into a predatory business model by their lack of utility.
- sacrificing your data and privacy isn't an actual cost
I don’t see where he claims this. He suggests that many people consider the cost so low it is practically nothing — I think this is probably true for many people who happily provide access to their data in exchange for perceived benefits.
If you indeed value your privacy and data more than the benefits you get by sharing them, you can refrain from using the services. In my experience, most people are willing to get the grocery store discount card to get cheaper bananas.
Hm. All of these things he claim are FREE.
And yet, to get this FREE service, I have to give up my attention, time, and personal information to a company who will then use that information for the sole purpose of distracting me from the information I wanted in the first place.
This may be great when you are 20 and have nothing but time.
But as you get older, your time and attention become precious.
I liken this to LA's smog of the 1970's. Getting all the things we wanted from industry, meant getting lung disease and tumors and brain defects from the air we breathed, because of those industries.
Then the EPA formed, and you have one or two "Smog Alert" days a year, in LA, rather than 200+.
The entire universe is just repeating patterns.
When we look back at this in 7 years, we will see the current attention-whoring of ads, advertisers, and visual spam, in the same way as 1970's smog: We didn't know how bad it was at the time, but then we learned, regulated it, and life got better.
Too bad we have to wait...
Human are great at exploiting value
Nobles made thousand of gold coin at using forced farm labor. Cheap price for military protection
Coton industry made million at exploiting slave labor. Slavery is barely a nuisance
Coal industry made million at exploiting child labor
Modern industries made million at using cheap labor force
Data mining company make billion at using user input
Progress is so nice anyway. I mean, look at all the thing we can buy
The guys is right: Privacy theft is objectively a small price to pay to buy the new phone delivered in 24h. And to see pic of my friend's cats freely.
BUT... I wonder why he list google as provider of all Knowledge in the world instead of Wikipedia
And youtube as entertainment Paradise instead of reddit, or the thousand of personal page you could find (once)
And why he define progress by stuff being free, and not about improvement of health, justice, equity. May be google, or fb didn't help so much on that front (I mean, beside the nice virtue-signaling doodle of the day)
Or the guy is perhaps a tad biased on its priorities? I realy dont care for my privacy if it's for more Wikipedia around and less of google or amazon. I guess I'm biased too
Clicking on those "Accept Cookies" notices was already annoying, but now it's become a daily reminder of how that smug Bryan Caplan knows Hubski better than Hubski knows itself. Aside from the macho schoolyard language and attacks on the author's character (which, I admit, he did not say would not happen), Caplan perfectly predicted Hubski's response.
In this short essay, he made just a few simple claims.
Technology companies provide us with great benefits.
No one earnestly disputed this claim. The fact that the conversation occurred on an online platform is suggestive. Travel agents still exist, but people overwhelmingly choose to book online. The postal service exists, but people prefer e-mail. Telephone service exists, but people send electronic messages. Bank tellers exist, but people check their balance at home. Taxis exist, booksellers exist, etc. etc.
"Undercutting" is simply a pejorative way of saying "offering a better deal."
Yet the people who benefit from tech companies mostly complain about them.
What better example of "searching for dark linings in the silver clouds of business progress" could you ask for than a comment, quite as long as the article itself, finding fault with each tech company mentioned, one by one?
Big Data was the main point of contention. Caplan is quite clear on the costs and benefits tech companies have brought to data aggregation and privacy:
Benefits:
- For practical purposes, we have more privacy than ever before in human history. You can now buy embarrassing products in secret. You can read or view virtually anything you like in secret. You can interact with over a billion people in secret.
Costs:
- Then what privacy have we lost? The privacy to not be part of a Big Data Set. The privacy to not have firms try to sell us stuff based on our previous purchases.
If your values put the costs greater than the benefits, quit Facebook and don't shop at Amazon. If your favorite local shop closed under pressure from internet sales, sorry, but the vast majority of people prefer to shop at the online store that has a neurotic obsession with pleasing customers with incomparable convenience, vast selection, and low prices.
Why are these companies keeping track of our data, anyway? It was creepy when Target figured out that a teen girl was pregnant before her father knew.
We all know what motivates corporations: profit. But that's just the beginning of the explanation. Profit comes from revenue, and revenue comes from customers. Customer demand is the best explanation for corporate behavior. People pay tech firms to collect and aggregate personal data so their ads will be better targeted.
- Facebook made more than $40 billion in revenue in 2017, approximately 89 percent of which came from digital advertisements.
Caplan argues that privacy has improved, not that it is not perfect. Pointing out some ways in which privacy protections are imperfect does not invalidate his argument.
You can still skip town and buy something at a random shop. You can still buy a dirty magazine at the gas station. You can still research a skin condition at the library. You can still support a dissident political position by walking around outside with a sign. You can still put a paper letter in the mail.
In addition to these options, you have the option of doing these things online. Tech has given us more options, and even if they are not perfect it is an improvement. Thus
- When business offers new energy, new housing, new food, the wise are grateful to see the world improve, not outraged to see a world that falls short of perfection.
GDPR is exactly what he is talking about when we have to constantly click "I agree" while online in order to satisfy European bureaucrats. It is common knowledge that websites collect data, so "Implicit consent was working admirably." For those who do not realize they are being tracked, constantly clicking to make notices go away is not particularly educational.
- You can still skip town and buy something at a random shop.
Not if the shop's not there.
The population of the Los Angeles Greater Metropolitan Area is 18.79 million according to Google. Yet I was unable to buy spare parts for a Shimano 105 Groupset anywhere within the city. The most popular line for the most popular bicycle part manufacturer in the world and the only place it was available was Amazon because everyone else doesn't want to compete on price. So they've got some Dura-Ace in stock at four times the price because it's a luxury item people want to fondle.
Sure- any number of shops could get it for me. They're on a 4-week turnaround because they've refined their supply chains to the point where they only get what they can sell. And they're not going to compete on price because if you needed it you'd buy it off of eBay - it'll show up gray market from Shenzen a week faster than they can get it anyway and if none of it fits, it's your problem for "not buying local." And yeah - some of those parts I had to order two or three times because Amazon doesn't pay their drivers enough for them to not have a "not feelin' it" day. So in the end you can't "buy something at a random shop" you have to find it online, make sure it isn't fake, wait a week, and then go five miles to the nearest Amazon Locker because at least there? You know it'll likely arrive.
Your perspective in this discussion is invaluable. Most of us never buy targeted Facebook ads.
Do you think that when you paid Facebook to identify users within ten miles, by sex, age, and education, that gave Facebook incentive to collect personal data on their users?
You've worked in a few sectors. Do you think it would be smart business for Facebook to collect as much data about their users as possible, so they can offer you the widest possible menu of targeting choices when you want to advertise your next venture?
Do you think that when you pay an annual fee to Amazon for the privilege of being a Prime Customer, you directly support and promote the business practices you complain about?
So your argument, then, is corporations are allowed to do whatever nefarious shit they feel like because it is the duty of every consumer to have perfect 100% clarity into the morality of their purchases? That the calculus of the transaction lies on the virtue of the consumer, not the provider? You're arguing that if the world didn't want the Amazon to burn they shouldn't have allowed Bolsonaro to win.
As for Facebook, targeting by sex, age, education and distance is absolute fucking child's play. That level of granularity was available in the junk-mail era. Facebook's innovation was to allow you to target 16-year-old girls on their period who listen to Taylor Swift. Or 55-year-old white men with an interest in Ruby Ridge, Dale Earnhardt and Vince Foster. Facebook didn't start with the basic offering and work their way finer and finer - they hit the ground running with microtargeting. They had the data, they didn't do the due diligence, they monetized COINTELPRO. Our prior use of Facebook (we discontinued our Facebook advertising long before Zuckerberg testified to Congress, if I recall correctly) was an extremely blunt use of a surgically precise tool so no, I would say we were doing the exact opposite of incentivizing them in their methods. But then, we're some shitty brick'n'mortar establishment in the hinterlands of Seattle, not Cambridge Analytica so really, what was your economic argument again?
As to Amazon, no aspect of my Prime membership contained any votes for Prime Marketplace or Prime Video or Prime Pantry. By your argument, if I wanted local bike parts I should opt out of Amazon Prime and be incapable of purchasing anything within two weeks. This is like your "if you don't like cars you can always ride a horse to work" argument which is Ben-Shapiro-grade speciousness.
- Yes - you can do all these things but when you create a social environment that practically requires you use technology, you're going to hand over the keys because there's no other option.
You can ride a horse to the grocery store. You might blame the Ford Motor Company if this is inconvenient, but Ford couldn't have made cars the default form of transportation if customers didn't buy them. And if Ford didn't make them, customer demand for motor vehicles would have been satisfied by someone else. Customer demand is the best explanation for corporate behavior.
- I remember trying to delete Facebook because of "privacy concerns," guess how long that lasted?
It has lasted several years for me, and I have no plans to return. I miss getting some updates and invitations, but on balance it's not worth my time. I left my smartphone on the charger one Sunday as an experiment. I missed some messages, and nothing terrible happened. Have you tried asking classmates to contact you via other channels? Or creating a fake account just for classwork and leaving your personal details out of it?
When you say you "have to" use social media to communicate, aren't you really saying that it's simply more convenient than voice calls, personal visits, or written notes? You don't "have to," you choose to because it is the best of the available options (including the option of not communicating).
- He's applying a rational-actor model to individual choices.
The rational-actor model isn't perfect; obviously people are not always rational. Can you suggest a better model for explaining or predicting human behavior?
- Car manufacturers have no real incentive to maintain emissions standards or follow safety regulations, but we created those things because they were negative externalities.
Pollution is a classic negative externality, but safety (for car occupants) is a benefit mostly realized by car buyers. But let's think through the incentives.
Ford is in the business of selling large, complex transportation machines. When you shop for a car, the dealer encourages you to add options like all-wheel drive, premium sound, the sports package, and a bigger engine. Ford makes more profit when it sells more equipment with the car. If enough customers demand a refrigerator in their car, manufacturers will provide them.
Why would Ford be opposed to adding emissions control equipment to a vehicle? Ford is interested in making profit, not pollution.
The primary reason Ford would be opposed to putting emissions equipment in cars is that customers don't want to pay for it.
- For example, the cost of taking a 4-cylinder 1.5L gasoline engine from no emission controls to the most stringent proposed EU standard (Euro 6) is around US$360, whereas the cost of taking a 4-cylinder 1.5L diesel engine from no emission controls to Euro 6 standard is around $1400.
--from an International Council on Clean Transportation report published in 2012. Euro 6 standards took effect in 2014.
If customers demanded emissions controls (and were willing to pay the cost), manufacturers would already have incentive to provide them.
Rational customers might calculate that the air they breathe won't be noticably cleaner if they pay for emissions controls but most other people don't, so it's not a worthwhile expense for them. If they knew everyone else would also buy the controls if they do they might (or might not) decide the benefit is worth the cost.
Legislation is a way to solve this coordination problem (making people internalize the cost of their externalities), by forcing everyone to buy cleaner cars. Like anything else, this approach has pros and cons.
- The problem is humans will usually always choose short term convenience over long term consequences
That sounds like something a model would predict... and it's not entirely irrational. The short term is more predictable than the long term. Spending money now, or buying on credit, means you will definitely get to enjoy the product. I save in a retirement fund, but there is some risk that I won't be around to enjoy the savings, or some misfortune will make the funds unavailable when I want them. Spending resources today to reduce the risk of a catastrophe in 100 years could be a mistake if (1) the catastrophe happens anyway or (2) some other catastrophe happens or (3) some unforseen innovation would have averted the catastrophe at much lower cost.
- Regarding the model - I don't think any model is ever going to really work.
Agreed, no model is perfect. If you want to understand and predict human behavior, you can make random guesses or use an imperfect model. An assumption like "when stuff costs more, people buy less of it" is reliable enough to have some predictive power.
- My main beef with libertarian economic theory is it feels like a simplification of reality much like Marxism is.
The rational-actor model isn't a libertarian concept. Any model is a simplification, the idea is to reduce the complexity of the universe to make it more comprehensible. The question is how accurately the model represents reality; behavioral economics has been challenging rational choice theory recently.
Back on topic: Caplan holds libertarian views. Does that mean that when he asserts that (1) tech companies produce great benefits and (2) people mostly complain about tech companies, he must be wrong because libertarianism is also wrong? That's the feeling I got from the responses here.
- That's the feeling I got from the responses here.
That's because you're trying SO HARD to get that feeling. You absolutely refuse to acknowledge that the article "solves by inspection" a dozen different things that absolutely no one else considers solved.
Car manufacturers sell cars on the selling points that matter to consumers. In the '90s it was cup holders. In the '80s it was a commanding view over the road. In the '70s it was "please god can we return to the '60s despite these horrible emissions standards."
You act as if consumers buy cars based on their emissions levels when even the EPA just insists they pass. All the ZULEV PZEV bullshit the manufacturers slap on the back are poorly-defined terms created by the California Air Resources Board, not the EPA, and they're not something you test for. Most consumers want the best performance they can get that abides by the laws they believe in and don't concern themselves with minute decisions influenced by driving habits beyond pass/fail.
That whooshing sound is you blasting by #dieselgate as if it isn't there.
You can ride horses in and around Griffith Park. They are illegal everywhere else.
Customer demand is the best explanation for corporate behavior... once you account for the externalities that the corporation is allowed to pick. Customers didn't demand pollution they were helpless to stop it until the EPA. Customers didn't demand seat belts they didn't have an option until they were mandated and yes I know Ford had them as options nobody bought and that doesn't matter because safety equipment never has a lobby it wasn't until a dozen kids got killed that three-wheelers became four-wheelers it's not like the manufacturers did it of their own accord.
- In this short essay, he made just a few simple claims.
Oh, come now. He argued that technology was an unalloyed good by deliberately devaluing everything lost. You can't say "no one earnestly disputed this claim" when I have a 500-word essay on food deserts and the annihilation of commerce.
You can't restate the argument as if no one answered your complaints last time. "Profit comes from revenue, and revenue comes from customers" and profits and revenue are not a piece of the civil experience in any way shape or form. THAT is the beef. Like when he just whooshed the fuck over the Muckraker movement and why they existed.