The Twitter and Facebook bans on President Trump and the Apple, Google and Amazon bans of Parler certainly intensify one’s dislike of those tech sector giants. Yet beyond dislike, there is a question to be answered: is it possible that, despite their astronomical stock market valuations, they may reduce the overall economic value of global output? It is a question well worth pondering.
There are plenty of examples of products that are economically counterproductive. In the 18th and early 19th century, cheap gin wrecked the lives of innumerable working men and women, especially in the cities. You only have to look at Hogarth’s “Gin Lane” print to see the effect of it, drawn with Hogarth’s usual unerring accuracy. Only in the middle 19th century, with licensing laws, food purity laws and rigorous enforcement of taxation, did gin become a relatively harmless tipple, no longer adulterated and too expensive to wreck impoverished lives.
Similarly, in the late 1940s and 1950s, there was great excitement about the possibility of atomic-powered automobiles, that would hardly ever need to be re-fueled and would provide much cheaper transportation than the era’s gas guzzlers. Had global warming been thought of then, atomic automobile proponents would have stressed the value of their favored product in combating it. Yet we never got atomic-powered autos, for one very good reason: nobody trusted John Q Public in charge of a fast-moving nuclear reactor. Again, the potential dangers of the product greatly exceeded its benefits.
Free-market capitalism has many virtues, and only one flaw: it assumes consumers are rational “economic men” making buying decisions through an informed, calm analysis of the benefit to them of those decisions. Since this is not always the case, minimal regulation, preferably of the “nudge” variety, is necessary to steer consumers away from products for which they may have an irrational craving, but which will damage them. Hogarth had no objection to consumers getting drunk; his companion “Beer Street” to the “Gin Lane” print shows the British populace fat and happy, enjoying life and prospering, not all of them entirely sober. (You didn’t want to drink the water in 18th century London – it would kill you quicker than gin!)
Social media as a product group has much in common with both atomic automobiles and cheap gin: it shares the technological wonderland futurism of the one with the harmfully addictive qualities of the other. Like atomic automobiles, social media can be abused to cause immeasurable damage, as we have seen over the last few years. Like gin in 18th century London, they poison those who consume them in excessive quantities, though in their case the poisoning is mental rather than physical.
There are a number of economically counterproductive features of social media. One is that they are funded mostly by advertising, and so have an interest in cramming as much advertising as possible into the attention focus of their consumers. This without question produces over-materialism; consumers focus entirely on material needs and satisfactions, spending far more than they can afford on them and neglecting entirely the inter-personal relationships and intellectual pursuits that make their lives truly satisfying. By increasing consumers’ focus on material consumption, social media are reducing their level of satisfaction, and thereby destroying economic value. (They are also consuming huge amounts of their users’ time, an intrinsically valuable commodity.)
Second, the ability of social media to “troll” and persecute its users is a huge cost of their existence. This is not a political point; the utterly “woke” Meghan Markle, Duchess of Sussex, who had more than 10 million Instagram followers, has described the online trolling as “almost unsurvivable.” When a young, rich, happily married self-confident woman with all the “appropriate” political and social views like the Duchess of Sussex finds the trolling on social media to be damaging, one can only imagine how much damage is done to people less rich, attractive, successful and politically mainstream.
The recent Twitter and Facebook bans of President Trump and the universal ban of the smaller social media service Parler raise further issues. Section 230 of the 1996 Communications Decency Act provides that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” By this provision, Internet Service Providers and social media are given immunity from libel, obscenity or sedition suits caused by content provided by any of their users.
In 1996, this was a very sensible provision; I remember as a new user of the Internet welcoming it myself. The Internet was supposed to be free of government control, and so it made sense that ISP providers and other content hosts should be able to operate without worrying about the content they hosted.
The freedom of the Internet from government control did not last; for example in 2009 the U.S. Treasury decided that it did not like the ability of U.S. consumers to store value through an early gold-backed forerunner crypto-currency, E-gold, and so closed it down. This was done despite the fact that E-gold had been established in 1996, five years before the oppressive Patriot Act that was used to close it down and that E-gold’s money transmission capabilities were shared by all banks (and today, by many fintech companies).
Since that time, it has become clear that social media are happy to use the provisions of Section 230 to protect themselves, while censoring increasingly rigidly any speech of which they disapprove (which means in practice conservative speech, since they are all West Coast “woke” leftists). The Parler example is especially egregious; Amazon, Google and Apple are denying Parler, itself a social media service, the same Section 230 protections of which they avail themselves.
The most intelligent approach to social media tyranny may be that of Poland, which this week announced new legislation whereby Internet users could file complaints electronically against social media companies de-platforming accounts, and those social media companies would be subject to a fine of up to 8 million zlotys ($2 million) for each account they de-platformed that was legally permissible in Poland. While the fines in this case are modest, a universal application of this principle would certainly get the attention even of the extravagantly wealthy Facebook.
There are thus now three ways in which social media are economically destructive. By their excessive advertising, they push their dozier users into mindless consumption, wrecking both their bank balances and their lives. They cause immeasurable psychological damage to their more fragile users, especially those teenagers and the lonely who become addicted to their use in the same way as the poor of Hogarth’s London became addicted to cheap adulterated gin. Third, by their abuse of Section 230, they promote the most leftist and damaging political ideas, while suppressing free-market and conservative ideas with which they disagree. As we have seen, that promotion may by itself be sufficient to tip the balance against economically sensible management, in the U.S. and elsewhere, thus causing incomparable long-term damage.
That seems sufficient evidence to show that social media do immeasurable economic and social damage, far in excess of their benefits, explosively and artificially magnified as those benefits are by the current hyper-extended stock market. Marcus Porcius Cato (BCE234-149) used to end his speeches in the Roman Senate with “Delenda Est Carthago” calling for the utter destruction of that unfortunate North African city. A few years after his death, the noble city of Carthage was duly destroyed, and the fields surrounding it sown with salt to prevent people from living there. The same solution needs now to be applied to social media.
(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)