Today marks the 20th anniversary of Wikipedia’s website going live. The online, collaboratively sourced encyclopedia is one of the internet’s biggest success stories, but one that, on the face of it, conventional economic analysis would suggest was the least plausible.
The free, volunteer‐edited site today hosts 55 million articles in 300 languages, including 6.2 million individual content pages in English that have been subject to almost 100 million edits. The Wikipedia page about Wikipedia itself cites articles claiming it is the 13th most popular site on the internet, with 1.7 billion unique visitors and 20 billion page views per month.
Some academics remain snooty about an encyclopedia that can be “edited by anyone,” but Wikipedia is often a go‐to website for even established researchers looking for a quick overview of conventional wisdom or to double‐check a fact cited elsewhere. The site has been adopted by companies such as Amazon and Apple to answer factual questions in voice assistants and smart speakers, and by social media companies such as Facebook to provide information links on posts.
There is good reason for this. A 2005 Nature study found that Wikipedia had decent accuracy compared to the expert‐written Encyclopedia Britannica. Why? Aggregating information from a wide and diverse editor and reader base helps quickly correct obvious errors, especially on contentious and highly read topics. The articles that are most read then, over time, tend to be more accurate. Embedded within Wikipedia’s model is a market‐style feedback mechanism that ensures resources head to improve product quality where demand is highest. And, of course, because it utilizes new, rapid internet technologies, this collaboratively sourced website can update much more quickly than the book‐bound encyclopedias of yesteryear.
In a world of filter bubbles and media segregation, Wikipedia has also proven somewhat of a mediating resource. Analysis has found that a weak version of Linus’ Law holds for Wikipedia—that “Given enough eyeballs, all bugs are shallow.” On articles with plentiful contributors, such as political pages, the large number of editors combined with Wikipedia’s own evolving protocols helps achieve a high degree of neutrality.
This is an underappreciated success. Public debate focuses on the idea of internet gatekeepers “censoring” free speech. Wikipedia has largely avoided that accusation to date, despite being a highly read source with explicit safeguards to try to eliminate fake news and ill‐sourced opinion. True, errors or slant are harder to police on less well‐read pages. Wikipedia’s founder Jimmy Wales acknowledges that on certain niche topics, only those are who strong fans of the subject will tend to contribute, meaning the sentiment of articles will be biased. But in all Wikipedia is well‐trusted and widely believed to be doing a reasonably decent job, especially compared to the media. Some research even posits that engaging in Wikipedia edits causes contributors on political topics to become less slanted over time. Imagine!
Of course, such an open model is made possible by Section 230’s intermediary liability protections. As a nonprofit enterprise, the Wikimedia Foundation cannot afford to litigate the decisions of its volunteer editors. Section 230 allows it to both avoid liability for user errors and rectify errors without provoking litigation from those unhappy with the changes. While discussions of the law often focus on the judgments of ‘Big Tech’ moderators, it’s important to remember it safeguards the ongoing editorial judgment of Wikipedia’s hivemind.
As a non‐profit, Wikipedia is part of the rich tapestry of organizations that arise in a free economy. Often public debate overly focuses on “the market” versus “the government.” Wikipedia’s success as a free content, non‐profit institution highlights how within free economic systems intermediate organizations arise that can develop safeguards and standards that achieve the desired ends willed on by people calling for heavy‐handed government regulation, while obviating the need for that path which crushes new innovation.
Indeed, the site should be of particular interest to libertarians. Jimmy Wales is on record at Cato as highlighting that the inspiration behind it lay with his reading of Friedrich Hayek’s “The Use of Knowledge In Society.” That famous essay explained a key reason why central planning couldn’t match the efficiency of an open market. The market order is dictated by prices, which themselves reflect a host of locally embedded information that no single planner could ever comprehend or collect. Wales took the message to heart in regards to knowledge, thinking he could build something that could harness that localized, dispersed, and niche knowledge among individuals to produce a resource as globally comprehensive as possible.
Wikipedia is a useful case‐study for economists on certain other policy issues.
First, its existence shows how services with public good‐like characteristics can be provided in a free economy. Knowledge is something that is non‐rivalrous (me knowing something doesn’t “use it up” and so prevent you from knowing it) and non‐excludable (you can try to raise barriers to its acquisition but it can still spread relatively freely). Introductory economics textbooks would say these characteristics mean such a good or service would be underprovided in a free economy, requiring some state subsidies or provision. Indeed, some Wikipedia employees have been known to joke “Thank God our little enterprise works in practice, because it could never work in theory”.
Yet it turns out donors worldwide are willing to fund the knowledge venture because they find it useful or buy into the vision, while enough editors volunteer to participate because they find satisfaction and usefulness themselves from the pastime. Mastering Wikipedia’s rules and guidelines make this a bit like Terence Kealey’s “contribution good” idea.
Second, the website reminds us that network effects, other things given, enhance consumer welfare, rather than diminish it. In the Big Tech antitrust debates it’s common to read that competition is inherently stifled in social media or the search engine sectors because users find services more useful when large numbers of other people are using them. This is said to constitute a major “barrier to entry” for competitors. But from the consumers’ perspective, it’s good that certain companies have high usership rates, as this improves the quality of the product.
In the case of Wikipedia, it should be obvious that the readers benefit from large numbers identifying errors and removing biases. Yet nobody says “Wikipedia is unfairly monopolizing the online encyclopedia market,” because we recognize those benefits arise from an open, competitive process. So while there might be other anti‐competitive conduct charges against Big Tech companies, the existence of “network effects” should be separated out from other issues and not talked about as if they are a “bad.”
Finally, Wikipedia is a great example of how internet‐based products have enhanced human welfare in ways not picked up in conventional GDP statistics. The decline in the purchase of physical encyclopedias would show up as a decline in measured market activity. But because of innovations such as Wikipedia, we now have access to more information than they provided at a zero out‐of‐pocket cost. Research from two years ago estimated U.S. consumers valued Wikipedia then at $150 per year. That’s some consumer surplus. For context, the cost of Encyclopedia Britannica’s 32‐volume, five‐yard‐long set in 2012 was $1,400.
Sure, one can quibble that the way Wikipedia operates entrenches consensus positions and treats certain controversial ideas harshly. One can find examples of mistakes on the site, or bias or slant. But the counterfactual is the imperfect world we live in, just without Wikipedia. Human beings themselves exhibit biases every day. At least in‐built into the editorial process is a means of correction. Even the Wikipedia page about Wikipedia is pretty critical!
Wikipedia itself will have to evolve as more internet‐activity moves away from the desktop or laptop onto smart technologies. But for now, we should see sites such as Wikipedia as a testament to the open, collaborative opportunities a free economy allows.
New York City Mayor Bill de Blasio and New York State Governor Andrew Cuomo are currently at loggerheads over vaccine allocation in the city. The governor has only approved for the vaccine to be given to the first prioritized groups: healthcare workers in hospitals, urgent care providers, and nursing home residents and staff. New York City Mayor De Blasio believes that the city should be given authority to broaden eligibility further, and that if given that authority, they could already be vaccinating many more New Yorkers, including the over‐75 demographic at highest personal risk from the virus.
Yet Cuomo is refusing to relent, despite New York City officials being adamant that, using current eligibility criterion, vaccines sit in storage or are going to waste. As my colleague Jeff Singer explained this week, a lot of healthcare workers either have immunity from the disease already or do not want the vaccine. The restrictions mean some doses are having to be transported out of the city. This follows stories from earlier in the week that claim some public and private New York hospitals had used just 15 percent of their vaccine allocation.
Given vaccines are widely regarded as being in short supply relative to demand, that sounds baffling. One would think that if those eligible priority groups were not filling slots, providers would be seeking out other people to ensure that either appointment times or the vaccine doses themselves do not go to waste. Vaccinating anyone still susceptible to the disease has a public benefit by (at a minimum) reducing the chances of severe disease for the recipient.
Allowing pharmacists and providers to allocate spare vaccines to avoid waste is what economists call a Pareto improvement—a situation where nobody would be harmed but someone would benefit. That makes society better off. If the vaccine reduces transmission of the virus too, an additional inoculation makes everyone better off! HHS Secretary Alex Azar understands this. He warned states last week to not let “perfection be the enemy of the good” in rolling out the vaccine. Getting it in as many arms as possible was preferable to sticking rigidly to the recommended rollout prioritization, he said.
Here in DC, pharmacies have seen sense in regard to mitigating some of the waste associated with a centrally planned vaccine allocation like New York’s. Pharmacies have been vaccinating people from waitlists, or those in stores, if eligible healthcare workers fail to show up, or vaccines would otherwise be binned after vials are opened. I saw it with my own eyes a few nights ago, when a supermarket pharmacy announced that they had 4 vaccine doses remaining at closing time. The pharmacist opted to give them to the front two people in a line of about 20, and to two very elderly shoppers whom he identified as being more at risk from the virus.
Yesterday, I popped back towards closing time and was administered one of Moderna’s vaccines myself. I would have left the wait line if there had only been a few left, given an elderly couple were stood behind me. But owing to the violence on Wednesday in DC and the subsequent cancelled appointments due to the city’s curfew, the pharmacy had 8 spare doses that they said needed to be used yesterday. Better in the arm of someone than nobody. You don’t turn down a free shot.
So why not the application of such decentralized common sense in New York? Well, it doesn’t help that in the name of fairness and avoiding vaccine fraud, Governor Cuomo has claimed that any provider who breaches the state’s distribution plan could be liable for fines up to $1 million, and risk having their license revoked. Economists wouldn’t be surprised to learn that disincentives matter. Meanwhile, millions of elderly New York residents—those at the highest risk from this virus—are unable to be vaccinated by appointment, even as providers say they have spaces and vaccines remain in storage.
It’s impossible to think of a surer way to slow the overall vaccination process for the city than limiting eligibility and then imposing such a high cost on any deviation from it. And this points to an often unacknowledged truth. If you don’t allocate by willingness to pay a price, you must allocate either by letting politicians and bureaucrats decide who will get the good, or by some crude queue or waiting list.
Without the decentralized knowledge of who will want the good and when, allocation by bureaucrat can create either severe shortages or unforgivable waste, not to mention risking the allocation process itself being tainted by cronyism and political favoritism. Allocation by queue biases towards particular groups too. In this case, it favors those with time on their hands, who are able to spot news stories on Twitter and are young and able‐bodied, making them most willing to risk standing in the frozen meat section of a supermarket among shoppers for an hour during an aerosol‐transmitted pandemic.
As should be obvious, the idea that the bureaucratic or queuing methods lead to the allocation best suited to ending this public health crisis seems laughable. New York manages to combine the worst of both worlds—dictating limited eligibility in a heavy‐handed way and then deterring the safety valve of local providers allocating spare vaccines. The question then is not whether any allocation system is perfect. It’s whether a more market‐oriented system would get us closer to our social goals of herd immunity and hospital systems insulated from the risk of overcrowding sooner. It’s difficult not to conclude that, by ignoring basic economics, better outcomes in New York are being sacrificed on the altar of zero‐sum conceptions of fairness or “waiting your turn.”
If you’ve routinely endorsed conservative policies and candidates, but now find that right‐wingers have become chauvinistic, fiscally irresponsible and intolerant, consider the libertarian alternative.
If you’ve previously embraced liberal policies and candidates, but now find that left‐wingers have pushed identity politics and socialist bromides, consider the libertarian alternative.
Libertarians have praised President Trump for progress in the Middle East, success against ISIS, reduced troop levels abroad, lower taxes, less regulation, and the confirmation of judges who appreciate individual rights and limited government. On the other hand, we have criticized Trump when he derides our intelligence agencies, cozies up to dictators, alienates our allies, and exacerbates global tensions. We’ve also been troubled by his xenophobic immigration policies, protectionist trade barriers, punitive drug policy, excessive focus on the culture wars, and exploding federal spending.
Libertarians will support President‐Elect Biden’s plans for criminal justice reform, immigration liberalization, civil rights, social permissiveness, revitalizing American diplomacy, reducing our military commitments, and non‐proliferation. On the other hand, we will vigorously oppose higher taxes, more regulations, affirmative action, Medicare for all, the Green New Deal, expanded welfare, free college, ballooning entitlements, a higher minimum wage, and judges who think the Constitution is a malleable document that courts can exploit as an alternative to legislation.
In essence, libertarianism is the political philosophy of personal and economic freedom. We believe that capitalism is the most efficient and morally defensible means of allocating scarce economic resources. Philosophically, we subscribe, as did Thomas Jefferson, to the idea of unobstructed liberty “within limits drawn around us by the equal rights of others.” Government’s role is to secure those rights, applying sufficient coercive power – but no more than the minimum necessary – to attain that objective.
Put somewhat differently, we should be free to live our lives as we choose, as long as we don’t interfere with other people who wish to do the same. Of course, individuals can never be completely self‐sufficient. That’s why we sometimes need rules, enforced by government, to make peaceful cooperation possible. The risk, however, is that rules too extensive will produce a system of special favors that extracts largesse for the politically connected at the expense of the rest of us. By contrast, libertarianism relies on spontaneous ordering – minimizing the role of a commanding power that might preempt freely chosen actions.
Libertarians are not opposed to reasonable safety regulations, selective gun controls, or sensible restrictions in other areas. Moreover, we recognize that markets are not perfect. But neither is government. The relevant standard against which to compare our current framework is not a utopian world in which justice is ubiquitous and all inequities have been systemically purged. Instead, we have to look at the current environment versus one in which regulations would be more pervasive – meaning that some problems might be solved, but other problems would no doubt multiply.
Among those other problems: disincentives to innovate, favors to special interests, increased cost, reduced growth, government‐conferred monopolies, anti‐competitive barriers to entry, restricted consumer choices, higher prices, overlapping and confusing laws, abuses of public power, and excessive resources devoted to politicking and lobbying.
How, then, can someone who views the left as excessively collectivist and the right as excessively authoritarian join with libertarians in advancing socially liberal and fiscally conservative goals? One way is to vote for candidates who come closest to promoting pro‐liberty policies. Given the current political mix, those candidates will not be pristine libertarians. But it’s not necessary to agree with libertarianism across‐the‐board in order to move public policy in the right direction.
Second, a libertarian movement might be buttressed by supporting legislation and other political actions that foster personal autonomy and limited government. Such support – policy‐specific rather than candidate‐specific – could be in the form of lobbying, communications with government officials, letters to the editor, or donations to like‐minded organizations.
Finally, there’s the outside prospect of forming a viable third party. Two obvious hurdles complicate that approach. First, campaign contributions are presently limited to $2,800 per candidate per election. Effectively, that precludes all third‐party candidates except those who can self‐fund. Second, 48 of the 50 states award presidential electors on a winner‐take‐all basis. Only Maine and Nebraska assign electors, in part, district by district. Consequently, candidates who have no chance of winning a statewide popular vote will not be able to garner any electoral votes.
Regrettably, therefore, fashioning an undiluted libertarian alternative will take time and effort. But incremental progress toward favorable public policy is practicable, opportune, and indisputably worthwhile. Let’s get the ball rolling.
“There is no role for the U.S. military in determining the outcome of an American election,” Army Secretary Ryan McCarthy and Chief of Staff Gen. James McConville said in a joint statement earlier this month after Michael Flynn, President Donald Trump’s first national security advisor, declared in an interview with Newsmax that Trump could “take military capabilities, and he could place them in those [swing states], and basically re‐run an election” in those states. Other Trump backers have suggested that he might use a declaration of martial law combined with the powers of the Insurrection Act to overturn Joe Biden’s victory in the November election.
What would happen if a president actually tried these things? The answer, at least in the America we live in today, is that he would fail.
In a recent article, Bonnie Kristian at The Week quotes me at length on these questions. Martial law, I noted, involves a wholesale suspension of civil liberties, so “military commanders can issue orders to civilians” as well as “arrest and mete out punishment based on tactical needs of war rather than the civilian law on the books.” The only time it has been tried on a national scale was when Abraham Lincoln suspended habeas corpus rights during the Civil War to silence dissenters.
But in Ex parte Milligan (1866), the Supreme Court ruled Lincoln had overstepped his legitimate bounds. This ruling is “key” to understanding the president’s martial law powers today, Olson said. It means “the president cannot simply declare martial law at his whim. There must be a state of invasion or insurrection such that ground is actually contested, and resort to conventional civil courts and authority must have collapsed.” Absent those conditions, the court said in Milligan, martial law is “a gross usurpation of power,” and in fact “can never exist where the courts are open.”
The courts are open now, which means any declaration of martial law — including in the six states Flynn targeted — would be illegal. “Courts would not be afraid to recognize this as reason to strike down acts pretending to martial law authority,” Olson said, just as they haven’t been afraid to smack down specious election challenges. That might not stop Trump, Olson allowed, but it would stop many of the people he’d need to execute this plan. And even if their constitutional oaths did not constrain them, there would be “very real personal consequences for both civilian and military administrators should they go along” with such an unlawful proposal, Olson noted, as career bureaucrats and officers undoubtedly realize. (The Army statement is an indicator of this very understanding.)
Martial law has been ordered in some dozens of other instances, typically of brief and localized effect, as in quelling riots. Following the attack on Pearl Harbor, federal officials placed the territory of Hawaii under martial law through much of the war, but the Supreme Court in the 1946 case of Duncan v. Kahanamoku struck down the authority of military tribunals over civilians, ruling that even the very real perils arising from World War Two did not deprive Americans of the protections of the Constitution. “Our system of government is the antithesis of total military rule, and its founders are not likely to have contemplated complete military dominance within the limits of a territory made a part of this country and not recently taken from an enemy.”
More from Bonnie Kristian’s article:
The Insurrection Act gives Trump no additional leeway here. It does provide an exception to the general prohibition (under the Posse Comitatus Act) on using federal troops to enforce domestic law. But those exceptions — which typically involve violent insurrection — aren’t applicable in this scenario. Furthermore, Olson told me, “there is a separate set of laws in which Congress has not only disallowed, but even chosen to make a crime, actions by federal troops or officers that interfere with the right to vote.”
The “thing to remember about the Insurrection Act,” Olson added, “is that it doesn’t allow federal troops to enforce anything but already‐prevailing federal, state, and local law. It does not authorize martial law in the sense of deprivation of ordinary civil liberties, special tribunals, irregular punishment, street justice, cutting off resort to the courts, etc.” (In 2006, the annual National Defense Authorization Act included a provision which changed that, allowing the president to impose martial law via the Insurrection Act. Uproar was widespread, however, and in early 2008, Congress repealed the change.) So even if the Insurrection Act were applicable (which it isn’t), and even if there weren’t additional legal protections against federal military meddling in state‐administrated elections (which there are), deploying troops under this authority still wouldn’t result in martial law.
Both Ex Parte Milligan and Duncan v. Kahanamoku are full of the sort of ringing language about liberty that should inspire every patriot and constitutionalist. Writing for the majority in Duncan, Justice Hugo Black quoted the words of the earlier (1879) case of Dow v. Johnson in noting that “the military should always be kept in subjection to the laws of the country to which it belongs, and that he is no friend to the Republic who advocates the contrary. The established principle of every free people is that the law shall alone govern, and to it the military must always yield.”
Last week, Christmas came early for various disgraced GOP congressmen, presidential cronies who didn’t “rat,” and a latter‐day Lt. William Calley, thanks to a flurry of pardons issued by President Trump. As the 25th approached, I half‐expected “45” to wind up his clemency spree with a big present for himself. A Christmas Day self‐pardon would have been a fitting capstone to the ‘Me’ Presidency”: “🎶On the first day of Christmas/my true love (me) gave to me/a pre‐emptive pardon in a.…🎶”—eh, you know how it goes.
For whatever reason, Trump decided not to cross that particular Rubicon just yet. Instead, pardons went to son‐in‐law Jared’s dad, Charles Kushner (a big believer in family loyalty himself), Mueller‐probe targets like Paul Manafort and Roger Stone, and what the New York Times summed up as a passel of “convicted liars, corrupt congressmen and child‐killing war criminals.” Harsh: but, as they say, where’s the lie?
As I noted on the Cato blog a few months ago, “Trump is hardly the only president in living memory to issue a self‐dealing pardon… repay silence with clemency,” or even bestow presidential mercy on war criminals. Even so, this president “has amassed an overall record of shabbiness and self‐dealing that ranks him among the worst abusers of the pardon power.”
Last week’s pardon of four Blackwater security contractors who shot up a Baghdad traffic circle in 2007 is particularly grotesque. The White House announcement deploys the sort of obfuscatory language that comes in handy when you don’t anyone to come away with a clear picture of who did what: “when the convoy attempted to establish a blockade outside the ‘Green Zone,’ the situation turned violent, which resulted in the unfortunate deaths and injuries of Iraqi civilians.” The “situation turned violent,” a federal jury in D.C. concluded in 2014, because Blackwater sniper Nicholas Slatten, unprovoked, shot the driver of a stopped car, kicking off a fusillade of gunfire from several of his colleagues. When the shooting stopped, 14 civilians, including two children, were dead.
Last week, CNN published an account of the Nisour Square massacre from one of the lead FBI investigators on the case. What he describes is stomach‐churning:
At a break in the gunfire, likely during reloading, one of the little girls in the back seat yelled that “Ali has no hair.” When the shooting stopped and the Blackwater team began to move, Mohammed exited the driver door and opened a rear passenger door. Ali, who had been slumped against the door, fell into his father’s arms. Ali had been struck with a Blackwater round, which entered the rear driver side door and hit the boy in the head. As his father reached for his 9‐year‐old son, Ali’s brains fell out onto the street and onto his father’s feet.
On occasion, presidents have commuted the sentences of convicted murderers from death to life imprisonment, but full pardons for that crime are vanishingly rare. Yet here’s another area where this president has been a norm‐busting innovator: Slatten wasn’t even his first. In 2019 Trump pardoned one Army lieutenant, Michael Behenna, who shot an unarmed Iraqi prisoner and another, Clint Lorance, who ordered his men to fire on unarmed Afghan civilians.Read the rest of this post »
My colleague Michael Cannon had an excellent blog the other day on the subject of the distribution of vaccines. He rightly concluded,
Once governments have purchased vaccines, it’s not clear libertarian principles have anything useful to say about how they should distribute them. The question of how then to maximize social welfare—or alternatively, to reduce violent assaults—is an empirical one. It’s a fascinating question. But I’m not sure anyone knows the answer.
Too true. Libertarian principles indeed do not get us very far, especially in a situation where governments have made advanced commitments to buy vaccines. But, as Michael’s piece skillfully shows, we can, in principle, use economic logic to inform our answers.
The task at hand is to minimize the overall economic welfare costs of the pandemic—that means reducing the combined costs of lost lives, yes, but added to the costs of bad health, lost GDP, and, indeed, lost economic welfare from curtailed liberties or pandemic‐induced constraints on our activities. When the problem is set up in this way, one can see that a lot of the conversation so far has been inadequate.
As John Cochrane notes, a lot of the recommendations for distribution have simply implied that, after vaccinating healthcare workers, we should work down a list of demographic groups, starting with inoculating those with the highest death risks from COVID-19 and ending with those with the lowest. If it turns out the vaccine only reduces the symptoms of COVID-19 but doesn’t reduce our ability to transmit it much, that might be a reasonable position. But if the vaccine itself helps stop the spread of the disease among the vaccinated, then this is not necessarily the best way to go.
In fact, one modeling paper by biostatisticians at the University of Washington has found that if the efficacy of the vaccines are high (as seems true) and we have enough to inoculate, say, 40–50 percent of the population fairly quickly, then it is optimal to prioritize vaccinating the “high transmitters” first , i.e. people most likely to spread the disease through their activities (proxied for as the under‐50s.) That’s because if the vaccine is effective in stopping the spread, and you inoculate those most likely to spread it, you protect those individuals and those they would otherwise have transmitted the virus to. In addition, it seems likely we would see significant overlap between those most likely to spread the disease and the gains for formal market economic activity too. So, provided these assumptions hold, you might get a much bigger bang for your shot from vaccinating younger groups first.
The CDC appear to have thought about this a bit, in including “essential workers” as a priority group for inoculation, but nobody seems to be willing to countenance the logical implications more broadly. Should college students, bar dwellers, and business travelers, for example, be prioritized in order to reduce the spread of the disease? That University of Washington model reckons we could see 30 percent fewer deaths if we optimize the vaccination distribution to minimize deaths. That, of course, is dependent on an efficient operation to actually do this. (Note: if the vaccine has much lower availability, or we can roll it out to everyone quickly, then prioritizing those most at risk is instead the correct approach).
Yet in truth, the remorseless logic of how networks operate has significant implications beyond choosing demographic blocks to prioritize. So far, people have talked about these groups as if their distribution geographically doesn’t matter. But if, say, the elderly are thinly spread throughout a certain state, then working down a list of vulnerable groups may not do much to reduce transmission of the disease, or indeed facilitate the removal of much in the way of economic restrictions, given the risks associated with the virus still spreading far and wide to the semi‐vulnerable.
As Tyler Cowen explains, it might be better to concentrate on administering the vaccine first in a geographically targeted way–say a major city within a state–rather than inoculating groups by age spread right across it. That way we could at least achieve localized herd immunity more quickly, allowing a near‐full economic normalization at least in certain places. We therefore potentially reduce the economic welfare costs of the pandemic along the path to the eventual goal of full national herd immunity.
In short, even if we assume the government will decide how to distribute most vaccines, with those prioritized having neither the ability to give or sell that right to anyone else, allocating scarce vaccinations to those personally at risk from the disease could produce sub‐optimal societal outcomes. Remember, as Michael made clear, in a world where trade‐offs exist, we should be trying to minimize the overall costs of the pandemic, not just reduce the highest death risks for individuals.
Facebook is under assault again, this time for real. The Federal Trade Commission and 46 states have filed an antitrust case to make the company divest itself of Instagram and WhatsApp and submit to restrictions on its future acquisitions and deals.
How many times have I seen this story play out as West Coast tech companies find themselves suddenly facing unwanted attention from Washington? It was bad enough that congressional committees kept summoning founder Mark Zuckerberg to hearings, both in‐person and virtually, forcing him to trade his T‐shirt and hoodie for a suit and tie.
Zuckerberg can afford the new clothes and the flights to Washington. The company can afford the hundreds of millions of dollars in legal fees it will face. The real problem is that the most important factor in America’s economic future—in raising everyone’s standard of living—is not land, or money, or computers; it’s human talent. And some part of the human talent at America’s most dynamic companies is being sidetracked from serving consumers to protecting the company from political predation. Another productive company is being sucked into Washington’s zero‐sum parasite economy.
Like so many other founders in our most dynamic industry, for years Zuckerberg was content to stay on the West Coast developing software and building a business. Then he found his company targeted by activists and politicians and had to respond. “He was completely apolitical. His political views had to be coaxed out of him,” recalls Tim Sparapani, the company’s first public policy director.
Now, with some 225 million Americans using his social media platform for free, he’s forced to deal with attacks from both left and right. This means that some portion of his time and brainpower is being diverted from creative, customer‐focused work to dealing with politics.
It’s sadly similar to what’s happened to other tech companies. For the past 40 years or so, West Coast‐based technology firms have revolutionized our lives. They’ve created systems for documents and databases. They’ve helped us run our homes and our businesses more efficiently. They’ve created a World Wide Web of information and communication. They’ve put all the knowledge in the history of the world into our pockets.
And for those efforts, they’ve been badgered and summoned and subpoenaed by politicians.
It’s getting to be an old story. For a decade or so Microsoft founder Bill Gates and many other millionaires in Redmond, Washington, got rich the only way you can in a free market: by producing something other people wanted. A lot of brilliant people worked long hours producing computer software that millions of people chose to buy in a highly competitive market that offered lots of other options.
Then the federal government noticed that Microsoft was too good and was helping its customers too much. It launched a Federal Trade Commission investigation, later compounded by a Justice Department investigation, to determine whether Microsoft “has monopolized or has attempted to monopolize” markets for personal computer software and peripherals. Microsoft gave in and agreed to restrictions on its contracting and pricing policies in order to avoid long and costly litigation. That wasn’t enough for the government or for some of Microsoft’s competitors, who went on to launch more antitrust investigations.
The government lured Microsoft into the political sector of the economy. For more than a decade the company went about its business, developing software, selling it to customers, and innocently making money. Then in 1995, after repeated assaults by the Justice Department’s Antitrust Division, not to mention its growing encounters with immigration, tax, trade, and other regulations, Microsoft broke down and started playing the Washington game. It hired lawyers, lobbyists, and PR firms.
In 1998 Gates wrote, “It’s been a year since the last time I was in D.C. I think I’m going to be making the trip a lot more frequently from now on.” And that’s a tragedy, because it diverted Gates and his associates from their focus on making better products.
Ironically, Gates also wrote at that time, “One of the things I know I’m going to be asked [at the congressional hearing] is whether Microsoft is going to try to control the Internet.” It’s pretty obvious today that Microsoft controlling the internet wasn’t in the cards.
And the story just kept playing out, even with the introduction of new characters. In the decade after that congressional hearing, one of the great success stories in the American economy was Google, the search firm started in a Stanford University dorm room. And then, around 2006, Washington came calling. There were demands to regulate search engines, maybe even declare Google a public utility. The company got the message; it opened a Washington office and hired well‐connected lobbyists.
One congressional aide had said of Microsoft, “They don’t want to play the D.C. game, that’s clear, and they’ve gotten away with it so far. The problem is, in the long run they won’t be able to.” Similarly, a lobbyist said that Google would have to learn that “It pays to pay attention to Washington.”
And once again one of our most innovative companies was forced to redirect some of its money and smarts to fending off political attacks.
A few years later it was Apple’s turn. After years as a cute little niche player, Apple suddenly started producing wildly popular products such as the iPod, the iPhone, and the iPad. And the Federal Trade Commission started grumbling about Apple’s threat to competition. Note the absurdity here: Apple creates whole new products and industries, consumer benefits that didn’t exist before, and the federal government worries that it’s somehow going to “limit” competition in a field it brought to the market.
Yet another congressional aide sniffed, “I never once had a meeting with anybody representing Apple. There have been other tech companies who chose not to engage in Washington, and for the most part that strategy did not benefit them.”
In other words: nice little company ya got there, shame if anything happened to it.
And now the bell tolls for Facebook. Zuckerberg and company created a social media site to “bring the world closer together.” The site allows hundreds of millions of people to keep in touch with neighbors, friends, and colleagues, and to express themselves on all manner of topics. Now it’s under political attack for antitrust issues, privacy questions, and the fact that some of its users have odd or unsavory ideas that they post on Facebook, just as they once used the printing press and the telephone. And like his competitors Zuckerberg is forced to divert a portion of his attention and money from innovation and investment. That’s not good for growth and progress.