Hit Hard, Hit Everyone, And Hit Them All At Once

Supreme Court Justice Louis Brandeis viewed big government and big corporations as symptoms of a “curse of bigness”. Their sheer size places a stranglehold around the democratic neck of economic freedom, or, to put it in simple terms: it takes away choice. Tim Wu, who is a law professor at Columbia University, argues in his most recent book “The Curse of Bigness: Antitrust in the New Gilded Age” to break up modern, large trusts of the digital age to immediately boost free market competition. But, in order to understand how he got to this conclusion, it is necessary to take a closer look at the historical context and how antitrust law and economic policy developed throughout some of the most impactful years for the United States of America. 

tl;dr

This paper is a supplement to the book “The Curse of Bigness: Antitrust in the New Gilded Age.” It covers the years between 1920-1945, with a focus on the New Deal, and represents material left out of the original book.

Make sure to read the full supplement titled The Curse of Bigness: New Deal Supplement between chapters 3 and 4 of the book with the same title by Tim Wu at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3646258

Thurman Arnold speaks with a subcommittee of the Senate Judiciary Committee in March 1938. (Source: WyoHistory.org)

In this supplement, Wu covers how the United States experimented with central planning and policies resulting in a state-managed economy similar to communism in the Soviet Union or state-sponsored socialism in Italy or Germany only to fail catastrophically. He goes on to detail large chain retailers’ quest against the Robinson-Patman Act. The J.C. Penneys, Sears, and Woolworths of the era. Lastly, he takes a look at Alcoa and the question of the benign monopoly. Is it beneficial to allow a single player to dominate a market segment when it offers fair prices without any apparent economic harm? To this, Federal Appellate Court Justice Billings Learned Hand had to state: 

“The Sherman Act has wider purposes. Many people believe that possession of unchallenged economic power deadens initiative, discourages thrift, and depresses energy; that immunity from competition is a narcotic, and rivalry is a stimulant to industrial progress; that the spur of constant stress is necessary to counteract an inevitable disposition to let well enough alone.”

Perhaps what makes this supplement great and worth a read is Wu’s historical account of Thurman Arnold. President Franklin D. Roosevelt appointed little-known Arnold from Wyoming to become the U.S. Attorney General for the Antitrust Division in 1938. Unlike any other antitrust enforcer before or since, Arnold went on to file 1,375 complaints in 213 prosecutions involving 40 industries, while pursuing 185 investigations – all by 1939. Arnold went after the car industry, the film industry, big pharma, big banks, and so many more. His strategy would become known as “shock treatment” whereby a lawsuit would target not just one monopolist, but all its vertically and horizontally integrated co-conspirators. It was as simple as “hit hard, hit everyone, and hit them all at once.”

This supplement is a must-read if you are about or in the process of reading the curse of bigness. If you have ever seen “The Men Who Built America” the historical context of the supplement will serve as valuable knowledge. If you rather watch Tim Wu talk about his book and his learnings, watch this

Nations Fail, But Why?

Is it because the culture of some nations is inferior to that of others? Is it because the natural resources of some nations are less fertile and valuable? Or is it because some nations are in more advantageous geographical locations? Daron Acemoglu and James A. Robinson argue the wealth of some nations can be traced back to their institutions – inclusive institutions to be precise that enable its citizens to partake in the political process and economic agenda. It’s an argument for a decentralized, democratic control structure with checks and balances to hold elected officials accountable and ensure shared economic benefits. Thus they conclude nations fail when a ruling elite creates extractive institutions designed to enrich only themselves on the back of the masses. More democracy is the answer to our looming political and economic problems according to the authors. Therefore political leaders must focus on the disenfranchised, the forgotten – those who have been left behind. It’s a conclusion hard to contend with. 

Altogether, though, this book is disappointing. Among the various economic theories that try to explain the wealth of nations, the authors fail to create quantifiable definitions for their premise. By failing to define inclusion and extraction the reader never learns about required elements, political structures and economic (minimum) metrics that can be measured or produce reliable data. Instead the authors appear to cherry-pick historic examples to demonstrate the perils of extraction and highlight the benefits of inclusive institutions. Throughout the book this reaches an absurd level of comparing contemporary nations with ancient nations without regard to (then) current affairs, social cohesion, trade or world events. This creates a confusing storyline jumping through unrelated examples from Venice to China to Zimbabwe to Argentina to the United States. I found the repetition of their inclusiveness and extraction argument quite draining for it seems to appear on every page. 

Why Nations Fail is an excellent history book full of examples for the success or failure of governance. The stories alone are well-researched, detailed and certainly a pleasure to read. However the author’s explanation for the economic failure of nations is vague and conjecture at best. They fail to answer the origins of power with quantifiable evidence and how prosperous (or poor) nations manipulate power. Altogether this book would have been awesome if it were reduced to a few hundred pages and less repetitive.

One Flew Over The Bitcoin Mine

Rarely have I found myself more confused about technology than after reading George Gilder’s “Life After Google – The Fall of Big Data and the Rise of the Blockchain Economy.” A book, supposedly, on the very technology of big data and the blockchain.

In twenty-five chapters across 276 pages, the author attempts to show off but not discuss, how the internet as we know it came into our daily lives. Gilder uses a wealth of buzzwords without ever defining them for the reader. The compounding effect of broad terminology, out-of-place analogies that seemingly disrupt the storytelling, make this book a dense and frustrating read. Even for the tech-savvy. He moves from monetary theory to artificial intelligence to silicon valley startup culture without skipping a beat. Until the underwhelming end of the book, I failed to understand the author’s rage against Google and new, emerging technology companies. In the absence of a clear theme of this book, I tried to theorize that the author set out to warn against Google’s free products, attempts to predict the end of the free product business model as the economy is moving towards cryptographic ledgers, most notably blockchain technology and decentralized cryptocurrency. However, Gilder then compares bitcoin to gold and points out the flaws of a scarce resource to become a stable coin in an economy. How this all ties together or even argues for a future with a decreased need of big data processing remains unclear. Why he chose not to discuss cybersecurity as the most potent threat to fiduciaries within a digitalized, capitalistic system remains unclear. This book is incoherent while being overly focused on ideological aspects. It would have served the readers to restrict the discussion to the actual technology.

With all that in mind, I feel this book has some minuscule merit for a philosophical audience without much need for technical detail. Gilder delivers on creating an entry-level overview for future exploration of blockchain technology, large scale computing and its implementation within an economic system that is supported by for-profit corporations. But beyond that, I feel, I am left more confused than enlightened about the interplay between data processing within financial markets, artificial intelligence deployed to equalize market barriers and blockchain as technology that would enable a seismic shift towards decentralized currencies. 

An Economic Approach To Analyze Politics On YouTube

YouTube’s recommendation algorithm is said to be a gateway to introduce viewers to extremist content and a stepping stone towards online radicalization. However, two other factors are equally important when analyzing political ideologies on YouTube: the novel psychological effects of audio-visual content and the ability of monetization. This paper contributes to the field of political communications by offering an economic framework to explain behavioral patterns of right-wing radicalization. It attempts to answer how YouTube is used by right-wing creators and audiences and offers a way forward for future research.

tl;dr

YouTube is the most used social network in the United States and the only major platform that is more popular among right-leaning users. We propose the “Supply and Demand” framework for analyzing politics on YouTube, with an eye toward understanding dynamics among right-wing video producers and consumers. We discuss a number of novel technological affordances of YouTube as a platform and as a collection of videos, and how each might drive supply of or demand for extreme content. We then provide large-scale longitudinal descriptive information about the supply of and demand for conservative political content on YouTube. We demonstrate that viewership of far-right videos peaked in 2017.


Make sure to read the full paper titled Right-Wing YouTube: A Supply and Demand Perspective by Kevin Munger and Joseph Phillips at https://journals.sagepub.com/doi/full/10.1177/1940161220964767

YouTube is unique in its combination of leveraging Google’s powerful content discovery algorithms, i.e. recommending content to keep attention levels on its platform and offering a type of content that is arguably the most immersive and versatile: video. The resulting product is highly effective to distribute a narrative, which caused journalists and academics to categorize YouTube as an important tool for online radicalization. In particular right-wing commentators make use of YouTube to spread their political ideologies ranging from conservative views to far-right extremism. However, the researchers draft a firm argument that the ability to create and manage committed audiences around a political ideology who mutually create and reinforce their extreme views is not only highly contagious to impact less committed audiences but pure fuel to ignite online radicalization.

Radio replaced the written word. Television replaced the spoken word. And online audio-visual content will replace the necessity to observe and understand. YouTube offers an unlimited library across all genres, all topics, all public figures ranging from user-generated content to six-figure Hollywood productions. Its 24/7 availability, immersive setup by incentivising comments and creating videos, allows YouTube to draw in audiences on much stronger psychological triggers than its mostly text-based competitors Facebook, Twitter or Reddit. Moreover, YouTube transcends national borders. It enables political commentary from abroad ranging from American expats to foreigners to exiled politicians or expelled opposition. In particular the controversial presidency of Donald Trump triggered political commentators in Europe and elsewhere to comment (and influence) the political landscape, its voters and domestic policies in the United States. This is important to acknowledge because YouTube has more users in the United States than any other social network including Facebook and Instagram.

Monetizing The Right

YouTube has been proven valuable to “Alternative Influence Networks”. In essence, potent political commentators and small productions that collaborate in direct opposition of mass media, both with regard to reporting ethics and political ideology. Albeit relatively unknown to the general populous, they draw consistent, committed audiences and tend to base their content around conservative and right-wing political commentary. There is some evidence in psychological research that conservatives tend to respond more to emotional content than liberals.

As such, the supply side on YouTube is fueled by the easy and efficient means to create political content. Production costs of a video are usually the equipment. The required time to shoot a video on a social issue is exactly as long as the video. In comparison drafting a text-based political commentary on the same issue can take up several days. YouTube’s recommendation system in conjunction with tailored targeting of certain audiences and social classes enable right-wing commentators to reach like-minded individuals and build massive audiences. The monetization methods include

  • Ad revenue from display, overlay, and video ads (not including product placement or sponsored by videos)
  • Channel memberships
  • Merchandise
  • Highlighted messages in Super Chat & Super Stickers
  • Partial revenue of YouTube Premium service

While YouTube has expanded its policy enforcement of extremist content, conservative and right-wing creators have adapted to the fewer monetization methods on YouTube by increasingly relying on crowdfunded donations, product placement or sale of products through affiliate marketing or through their own distribution network. Perhaps the most convincing factor for right-wing commentators to flock to YouTube is, however, the ability to build a large audience from scratch without the need of legitimacy or credentials.

The demand side on YouTube is more difficult to determine. Following the active audience theory users would have made a deliberate choice to click on right-wing content, to search for it, and to continue to engage with it over time. The researchers of this paper demonstrate that it isn’t just that easy. Many social and economic factors drive middle class democrats to adopt more conservative and extreme views. For example economic decline of blue-collar employment, a broken educational system in conjunction with increasing social isolation and lack of future prospects contribute to susceptibility to extremists content leading up to radicalization. The researchers rightfully argue it is difficult to determine the particular drivers that made an individual seek and watch right-wing content on YouTube. Those who do watch or listen to a right-wing political commentator tend to seek for affirmation and validation with their fringe ideologies.

“the novel and disturbing fact of people consuming white nationalist video media was not caused by the supply of this media radicalizing an otherwise moderate audience, but merely reflects the novel ease of producing all forms of video media, the presence of audience demand for white nationalist media, and the decreased search costs due to the efficiency and accuracy of the political ecosystem in matching supply and demand.”

While I believe this paper deserves much more attention and a reader should discover its research questions in the process of studying this paper, I find it helpful to provide the author’s research questions here, in conjunction with my takeaways, to make it easier for readers to prioritize this study: 

Research Question 1: What technological affordances make YouTube distinct from other social media platforms, and distinctly popular among the online right? 

Answer 1: YouTube is a media company; media on YouTube is videos; YouTube is powered by recommendations.

Research Question 2: How have the supply of and demand for right-wing videos on YouTube changed over time?

Answer 2.1: YouTube viewership of the extreme right has been in decline since mid-2017, well before YouTube changed its algorithm to demote far-right content in January 2019.

Answer 2.2: The bulk of the growth in terms of both video production and viewership over the past two years has come from the entry of mainstream conservatives into the YouTube marketplace.

This paper offers insights into the supply side of right-wing content and gives a rationale why people tend to watch right-wing content. It contributes to understanding how right-wing content is spreading across YouTube. An active comment section indicates higher engagement rates which are unique to right-wing audiences. These interactions facilitate a communal experience between creator and audience. Increased policy enforcement effectively disrupted this communal experience. Nevertheless, the researchers found evidence that those who return to create or watch right-wing content are likely to engage intensely with the content as well. Future research may investigate the actual power of the recommendation algorithm on YouTube. While this paper focused on right-wing content, the opposing political spectrum including the extreme left are increasingly utilizing YouTube to proliferate their political commentary. Personally I am curious to better understand the influence of foreign audiences on domestic issues and how YouTube is diluting the local populous with foreign activist voices.