Path Dependence
I felt constrained by what I should write for this. Then I realized, the title of this series is Sporadic Noise, a name intentionally placed to relieve the pressure of writing something consistently or of explicit use to the reader. If you, dear reader, can finish this, it may well be the least useful thing you have read (ever). Selfishly, I’m using this medium as an outlet for expression and little else. So here goes nothing.
What I Loved Reading This Week
[Study] Data Brokers and the Sale of Americans’ Mental Health Data
[Article] Reproductive Health Data
[Wiki Page] Section 230
[Wiki Page] Gonzalez vs. Google
In November 2015, a series of coordinated terrorism attacks occurred in Paris. At least 130 were killed by the terrorists, and the Islamic State took responsibility for the attack. Among those killed was a single American, 23-year-old student Nohemi Gonzalez, on an exchange program with California State University, Long Beach. Her family began to seek legal remedies against Google, the parent company of YouTube. Their suit argued that through its recommendation system that tailors content based on user profiles, YouTube led users towards recruitment videos for the Islamic State, and were partially responsible for Nohemi's death.[3] Google defended itself by relying on Section 230, passed as part of the Telecommunications Act of 1996, which provides immunity from content published on an Internet service provider's platform by third-party users. A lower court ruled in favor of Google, and the decision was upheld by the Ninth Circuit Court of Appeals.
What I Thought About This Week
As a student of political economy, I enjoy exploring the how change diffuses between academia, governments, companies, and NGOs. Specifically, I enjoy thinking about the role that each play in a functional society. What role should they play? What is the responsibility of each of these institutions? Importantly, do each of these institutions manifest in the world in a way that differs from its supposed role?
Charlie Munger would say, “show me the incentive structure and I’ll tell you the outcome” or something like that. This is one of the phenomena that ring true across almost every imaginable domain. Simply, we can expect people and organizations to act in service of their individual well-being. Behavioral economists will say, “people are not rational agents! Observed behavior is irrational.” The neurobiologists will pipe in, “genetic predisposition is the biggest predictor of human behavior!” And they are correct, human decision making is governed by a complex assortment of influences that are not entirely explainable. That being said, we can observe the grooves (policies/ reward mechanisms) that direct the flow of behavior expect fairly predictable outcomes.
We can look at how any institution is rewarded or punished for its actions and outcomes and reasonably forecast how it will behave.
For businesses, the ultimate reward is money (obviously). Banks tend to make the most money by selling the most sophisticated, high-margin financial products to the least-informed consumers, so they do. Some people argue the role of businesses is to make as much money as possible and that this behavior is consistent with its role.
Behavior of government institutions are only slightly different. Instead of selling a service directly to market participants, government institutions are fueled by budget allocations from other government organizations, ultimately kept flowing by a mix of taxes and debt service. So then, what must government organization do to get more money? Make a case to those allocating resources. "Please [governing body], XYZ is completely broken and if [government] wants its people to stop complaining about ABC, then we absolutely need more money”.
In the US, it’s often congress doling out money to different institutions. And congress is made of individual congress people who are attempting to balance the needs of 3 groups:
Their constituents (people who voted them in or could vote them in next time)
Their donors (people who gave them money for their campaign or could next time)
Their party (other congress people who collaborate in pushing a party agenda)
If we can assume the well-being of any individual congresspersons’ career will depend on how they can please these three groups, and we can can expect them not to deviate from improving their individual well-being, then we can easily imagine a world in which congresspeople and government institutions do the bidding of individual powerful corporations at the expense of the populous.
Is this the supposed role of government? To enable corporations to maintain unfettered access to markets and maximize profits for shareholders. Many have argued the role of government in society is to act as a check towards corporate power, and correct for market failures.
Market failure occurs when the allocation of goods and services in a market is not efficient, resulting in suboptimal outcomes for society as a whole.
In Book II of Plato’s Republic, one of his characters argues “justice arises from the social contracts put in place to protect the weak against the strong, and that unjust men will not be punished because they can use their injustices to grow rich enough to make pleasing sacrifices to the gods.”
In American society today, the bottom 90 percent represent the weak and the top 10% the strong. What I cannot tell however, is who are the gods and who are the unjust men, today?
Plato was a strong advocate against democracy, believing that any attempt at democracy is bound to devolve into plutocracy at best, and full tyranny at worst. For myself and many others who were churned out of the American education system, democracy feels axiomatic, it is fundamental to a good government and not one of many tools of statecraft.
Have a good week,
Elliot