Month: September 2017

Will There Be a Digital-Age Revival of Antitrust Enforcement?

It increasingly appears that the economics of the Internet tend toward the monopolization of certain distinct online niches. There is one dominant search engine (Google), one dominant social networking site (Facebook), one dominant online encyclopedia (Wikipedia), and one dominant online retailer (Amazon).

Bloomberg View economics columnist Noah Smith recently wrote an article entitled “Monopolies Are Worse Than We Thought.” In it, he contends that “There’s now evidence that market concentration could . . . be hurting workers, by decreasing the share of national income that they receive. It’s probably making inequality worse.”

U.S. public policy has traditionally disapproved of monopolies. However, after the Clinton Administration’s mostly unsuccessful attempt to break up Microsoft, there have been few recent administrations that have aggressively prosecuted alleged antitrust violations within the tech sector.

Furthermore, according to Josh Barro of Business Insider, “with the possible exception of Google, these firms are so far from meeting traditional definitions of anti-trust violations that very novel enforcement definitions would have to be developed to restrict them.”

That’s the dilemma that an ambitious young law student named Lina Khan attempted to address in her article in the influential Yale Law Journal. According to Steven Pearlstein of The Washington Post, she “laid out with remarkable clarity and sophistication why American antitrust law has evolved to the point that it is no longer equipped to deal with tech giants such as Amazon.com.”

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Amazon Should Locate Its 2nd Headquarters in a Struggling Midwestern City

Amazon has announced it will expand to a second headquarters outside of its current base in the Pacific Northwest. It is inviting companies to bid to be the next home of the Amazon corporation, and there are some 50,000 jobs at stake.

The contest is not the kind of development in the modern economy that I like to see. Instead of companies staying in a particular community and investing in its development, which would be the most ideal situation, giant corporations are instead often eager to relocate to whatever city offers them the best deal.

Of course, mayors have lobbied business leaders to bring jobs to their home cities for decades. However, companies considering expansion into a new region often appear to have a clear shortlist of contenders and a largely internal relocation process, rather than promoting this type of publicly-announced nationwide bidding free-for-all. Very unlikely markets have expressed their hopes of winning the Amazon second headquarters lottery, just as pro basketball fans in almost every city with an NBA team, even unlikely contenders, think their local franchises will somehow convince LeBron James to sign with them. Sorry to break it to the people of New Orleans, but the Pelicans aren’t going to get LeBron, and the Big Easy isn’t going to become Amazon’s next tech hub either.

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The Silicon Backlash: How the Tech Industry Went From Media Darling to Political Scapegoat

American culture is experiencing an unprecedented backlash against Silicon Valley and the wired world that it has provided us. The tech giants are being slammed by criticism from all sides. On the Left, they are criticized for aiding the spread of anti-Hillary fake news and for fostering income inequality. On the Right, they are criticized for allegedly enforcing “political correctness” and preventing their workers from expressing non-liberal ideas. This has led even parties on the usually anti-regulatory conservative side of the American political spectrum, from relatively mainstream Fox News blowhards to racist alt-right extremists, to come out in favor regulating digital platforms like utilities.

It’s interesting to consider how we got here. For most of my adult life, the Internet has existed, changing the workplace, popular culture, and social life in profound ways. However, for most of that period there has been surprisingly little political commentary and social criticism about the Internet’s transformative effects. When television first emerged as a dominant medium, it received some scorn from cultural critics for being allegedly mindless and lowbrow. The rise of the Internet was an even more profound change than the rise of television – no one was doing financial transactions or finding love over their TV sets, after all – and yet its emergence did not seem to elicit the same amount of cultural angst.

There are some good reasons for this. Television was closed, centralized, and unilateral, with a few networks dominating its early years. The Internet was open, decentralized, and interactive. If someone accused the Internet of being a “vast wasteland” of lowbrow culture and poor-quality writing, you could respond by advising them to create and upload superior content. The Internet quickly became far too diverse and vast to be subject to any such generalizations. Any topics you might be interested in, and millions of others you had no interest in, were being discussed and documented somewhere online. Individual users’ experiences were totally self-customizable. Furthermore, they could participate in online discussions, which seemed to be a major improvement over television, which did not allow you to talk back to it (at least, it was far less responsive when you tried).

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