This recent Econtalk with Matt Stoller was interesting. I wish I could say I learned something from it, but unfortunately Stoller was far too emotional and his arguments were poor. It is sometimes interesting to see facile anti-market leftism in plain view.
Stoller thinks that Amazon is deciding what products are available for sale, rather than selling the products that people want to buy. He thinks that Google and Facebook are deciding what kind of content you should be viewing, rather than trying to predict what kind of content you'd like to view and trying to match your expectations.
First off, Google, Amazon, and Facebook are emphatically not monopolies. I have literally price-shopped on Ebay, and despite the mild hassle of using a website I'm less familiar with that doesn't have my credit card on file, I bought from Ebay because the price was lower. I've done this numerous times, even though Amazon is my default. Amazon has a monopoly on online shopping in the same sense that MSN and Bing have a monopoly on the attention of senior internet users who don't know how to change their home page.
During the interview, Stoller claims implausibly that Bing and DuckDuckGo aren't adequate substitutes for Google search, but both give perfectly serviceable results. Whenever I've compared the two, or used Bing because it was the default homepage and I was lazy or curious, I've gotten perfectly good search results. I really don't know what he has in mind.
Facebook appears to have the market cornered on social media, but of course there are substitutes. Orkut, Google plus, LiveJournal, Twitter, Instagram, blogspot. Or good old fashioned e-mail and texting, like our hardy pioneer forefathers managed to get by with. Some people I know aren't on Facebook, and several have left it. Clearly people can do without.
Russ Roberts tries to correct Stoller, pointing out that consumers have vastly more options for books and (near and dear to my heart) craft beers than they did even two decades ago. Stoller responds to the point about books by implying that most new books are low-quality books about fart jokes. He responds to the point about craft beers by saying that a lot of them are owned by big corporate conglomerates. (?!?) Rather than contend seriously with a challenge to his argument, he seemed content to play the part of the sneering elitist. If I were to repeat Stoller's argument, I would feel like I'd failed an ideological Turing test. I really don't understand his point. Amazon doesn't decide what people will buy. For the most part its search results show people what they're looking for; there is very little latitude to manipulate this in Amazon's favor. At worst, Amazon can decide not to carry a product, and the buyer will have to go elsewhere to get it. It's kind of implausible that someone who is deciding which book to dedicate 10-20 hours to reading will just say, "Meh, I'll take the top hit of this search and just bury my face in it." Even if Amazon downgrades a book in a search because (for some reason) it doesn't want people to read it, readers who want that book will find it without too much trouble. Anyway, I'm not sure what the "solution" is to Stoller's problem. Should Matt Stoller be deciding which books are on offer? Should he be the one manipulating the ordering of search results, thus directing people to more meritorious books and less meretricious ones? I don't know how to satisfy his concern without doing some version of "Government agency decides which books have merit and which don't, and uprates/downrates accordingly." Or maybe he's fine with a market-based solution to the problem. Perhaps he just wants more options in the marketplace (ahem...eBay...ahem...BarnesandNoble.com).
Stoller thinks that these "monopolies" are shaping our preferences and telling us what to buy and read. I think, at the very most, these companies are moving along our indifference curves, not trying to shape our preferences.
Listen to the podcast, and read the comments section. This was one of the longer and more enlightening comments sections I've seen on Econtalk. Many people chime in to comment on Stoller's weak arguments and correct his factually mistaken examples.
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Economists have this really neat concept of indifference curves. Suppose I'd like 2 pants and 2 shirts. But I'd be just as happy with 4 pants and 1 shirt, or 7 pants and 0 shirts. It's best to have 2 of each, but give me enough shirts and I'll give up a pair of pants. You see this kind of declining marginal value with any paring of goods. (The idea here is that each additional unit of something is worth less than the last one. So to get me to take "all pants with no shirts", you have to give me a lot of pants.) You can plot these indifference curves in 2 dimensions (or more). Maybe the points (7,0), (4,1), (2,2), (1,4), and (0,7) describe one indifference curve. If you had more resources, you'd prefer more of everything and you'd be sitting on the curve defined by points (12,0), (8,1), (5,2), (3,3), (2,5), (8,1), and (0,12). I think Amazon, Google, and Facebook at best can nudge us to a different point on an indifference curve. That's not at all frightening to me. I think Stoller is trying to tell us that these companies can reshape our indifference curves completely, or compel us to spend more thus pushing us out to a different indifference curve, or that checking beyond the first few hits on a search represents a tremendous resource constraint for typical shoppers. I find this all very silly.
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