Greg Ip writes,
Messrs. Posner and Weyl argue these companies’ advertising-based businesses elevate quantity over quality. Content on Netflix Inc., which is subscription based, is a lot better than videos on YouTube, and as a result earns about 10 times as much per minute per viewer. If digital companies treated users as employees and paid them, it would improve the quality of online content while massively boosting labor income.
Ip gives favorable coverage of their book Radical Markets. David Henderson’s review is more mixed. I was sent a review copy, and I had a negative reaction, which I limited to one relatively minor criticism. Ordinarily, I try to avoid reviewing a book that I hate, but when it receives a lot of favorable coverage I become less inhibited. It’s time to unload on this one.
1. The writing is just atrocious. They make it difficult to extract the ideas from the fluff and rhetoric.
2. The title, Radical Markets, is a 180-degrees head-fake. What they actually advocate is radical despotism. That is, rather than try to improve markets by going out as entrepreneurs and doing things better, they play the role of fantasy despot. They want to back their experimental notions not with “skin-in-the-game” entrepreneurship but with state power.
3. For example, if Weyl and Posner think that social media would be better if companies paid users for data, then they should start a social media company that operates that way. If their intuition is correct, then this will be more efficient than the way that Facebook and Google operate, and the new competitor will eventually come out the winner.
4. In fact, my intuition is the opposite. I think that social media would be improved if the users paid the companies. But when I articulated that idea, I did so in an essay entitled Let’s Compete with Facebook. I explicitly rejected government intervention. In fact, the main purpose of the essay was to argue against fantasy despotism.
If I had anything nice I could say about Radical Markets, I would. But I haven’t felt so compelled to unload on a book since Phishing for Phools.
What did you think about the idea to compel owners to sell property whenever a high enough bid comes in, kind of a universal eminent domain, to solve holdout and NIMBY problems and make illiquid markets more fluid? One can look at the option of paying extra property tax as insurance, or renting an additional property right, from the state to prevent forced sales except at very high and unlikely bids.
It raises the question of how much the traditional right to sell solely in one’s own discretion (except in cases of eminent domain by the state) is worth to people.
I think it’s sufficiently crazy that the risk of it happening is asymptotically approaching zero. Ethically, it’s tantamount to punishing speeding with life imprisonment because every once in a while a speeder kills someone.
I think either side misses the consumer value of a BIG social media and a BIG Video streaming service. Facebook and Youtube have grown really big and really fast and I don’t see their ability to turn the next 5 – 10 years.
1) Yes Youtube has a unbelievable amounts of crap but there is a value to lots of material. There is something for everybody and think about the value of home improvement videos. Loads of them and you value them when you need it.
2) The great thing about youtube and Facebook with user providing the information is how easily they can change for creative destruction. Who would have thought videos on playing video games would be a big deal but they are. If kids stop watching these and go back to music videos Youtube will move automatically with new providers.
3) I still think subscription models has a limited audience and things like Netflix are way over-valued. (Like Uber or the way you feel about Amazon.) When you pay for something, you need a lot more value. So even as Netflix subscriber I still on the fence as the movie selection is awful. (And the current Disney contract runs out the next couple years which really could effect their selection.)
3) There is a lot of value of cheap and free. Most of the population lives paycheck to paycheck and that is not going to change anytime soon. An extra bill for $10/month for social media is something a lot people are giving up something.
Not sure that the Grep Ip review was actually favorable. Looks like the paragraph cited came from the June 13 WSJ. My initial response to the review was negative since I thought the ideas promoted in the book did not seem helpful. However, in Ip’s defense he did seem to try to take a neutral attempt at letting the book speak for itself. The other thing that got my hackles up was Ip’s characterization of Richard Posner’s son Eric as “libertarian leaning.” Eric is notoriously anti-free speech and it is very difficult to swallow the idea of him being “libertarian leaning.” People who prattle about monopolies seem to have a collective blindness to state sanctioned monopolies. The worst monopoly abuses today are public schools, US courts, the post office, state department, local government awarded cable monopolies, policing, and local utilities. The Supreme Court’s Janus decision is the most meaningful demolition of monopoly we will see in the remainder of our lifetimes. I have no idea of how they would go about getting media companies to treat viewers as employees. If it is such a great idea, why don’t they open up a media company and do it? It is impossible to take anyone seriously who wants to base public policy on their personal assessment of the relative qualities of youtube vs. netflix. How is revenue per streaming second a relevant indicator or anything. Netflix is great for Japanese TV and that is about it but I wouldn’t trade it for Master Chef Brazil playing on youtube. The selling-price of property solution destroys the essential nature of private property. I am all in favor of radical solutions to problems that resist more measured treatment, but further aggrandizing the state only worsens monopoly problems.
Weyl was recently interviewed by James Pethokoukis on the latter’s Political Economy podcast.
I was so annoyed with both Weyl’s presentation and his ideas (particularly the compulsory sale of your property and the completely incoherent response to the incentive effects of this, and the “pay the Youtuber” concept) that I did something that I haven’t done in a while. I angrily turned off the episode half way through, muttering assorted curse words.
He’s right about bees though.
He should have ditched Posner and written the book with Rory Sutherland instead. This is from a great article of theirs written three years ago:
“One problem with social media is that the cost of expressing opinions has become too low. You no longer have to buy a stamp, construct a placard or sit down with a pen and marshal your thoughts, nor do you need to bother to collect any supporting information — you press a button. The result of this is that opinions are little connected to behaviour. They have become a form of personal ornamentation; the human equivalent of the peacock’s tail, only without the corresponding burden to the peacock. ‘Look! My hatred of Katie Hopkins is even larger and more symmetrical than yours.’ When there was a cost to expressing an opinion, and a limit to the number of opinions you could express, a belief meant something.”
There’s a book in that. Or there would have been, but instead we got Radical Markets, unfortunately.
I kindly ask Arnold to give us a more thorough and concrete review, just with less negative emotions…