Late Night, with your host Sam

rts: Coasean comparative analysis of internet-famous twerps & propensity for being censorious bog wastrels.

— Absquatulous Meme (@Spivonomist) September 30, 2015

It's insomnia season at the Wilson household, and with it come the predictable eddies of madness. It occurred to me after reading a modest proposal by a fellow better known these days for Twitter altercations than for his short turn on a network game show that Internet celebrity provides very different institutional support than traditional celebrity.

The gist of the proposal: eliminate legislation that protects domain holders from liability for content posted by third parties. In other words, Blogger would be liable for what Mungo and I post here at EE. Think for a moment what the equilibrium would be in this game. Buzz in when you have the answer.

Now consider the organizations that support screen acting. Between the acting guilds, the agents, the publicists, the studios, and the ad hoc support networks that many top-tier celebrities have, famous actors have as much in common with regular people as Count Chocula has with Nosferatu. They enjoy, should they elect to avail themselves of it (ahem James Woods) a great deal of protection from the frothy purulence of hamfisted critics. Petty Internet celebrities, contrarily, enjoy no such organizational support. Constituents are too diffuse and too fleeting to effectively organize to provide reliable content filters. It is natural that otherwise gentle, sensitive people be spared harsh, direct criticism from semi-literates. In the absence of such a mechanism, it follows that these gentle, sensitive souls might neglect the difficult (?) task of following the implications of their proposals to their conclusions and instead petition the sovereign for redress.

Scurrilous blather is vexing. Perhaps the next generation of autoblocking technology will allow for a more comfortable browsing experience without resorting to scorched-earth changes to Internet jurisprudence. Perhaps.

For legal analysis:
Ken White comments here
Scott Greenfield here

Assume Surveillance

h/t Popehat for this howler from the Baltimore P-E. It's remarkable in that the author invites libertarians to join him in rejecting the institutions of private property, but the germ of the offer is privacy. Libertarians are worried about governments collecting private information, so they should also be worried about corporations collecting information.

I think this is [sort of] true. I am not a libertarian, so I won't speak on libertarians' behalf, but I retain some concern that the same large, amorphous organization that claims the legitimate authority to imprison, fine, or execute me also gathers voluminous personal data about me. And at first glance, businesses that do much the same thing with the end of offering me exchange opportunities is not just unobjectionable, but welcome. When I read passages like this:

Every moment, torrents of your personal data are pouring into corporate databases. This information is used to refine your credit rating, adjust prices for goods and services, brief potential employers, tailor dating opportunities, define your reputation, determine insurance rates, inform your medical treatment – in short, to influence nearly every aspect of your day-to-day life. And it’s all in private hands, unaccountable to democratic oversight and control, and almost always used to make someone else wealthier with no regard for your own interests.

I beam. People who don't know me are working tirelessly to make it easier for me to find goods and services that will improve my life? They're helping me find love? They're providing more accurate information to lenders so that I no longer have to directly subsidize the imprudent? And all they ask in return is a mere sliver of what these same services would have cost me even as recently as twenty years ago? That, my dear friends, is what I call a screaming deal.

That's awfully romantic, isn't it? That's why I don't believe it for a minute. While I do think that retailers collect data for entirely business-related purposes, it is the height of absurdity to think that Pooh Bear would ignore a delicious pot of hunny, even if it's in Rabbit's Howse.

I am still a Humean at heart. I assume that the sovereign seeks dominion where he can find it. I assume that constituents' scarce attention implies that for most people, the time and trouble it would take to properly research the extent of state surveillance exceeds the marginal benefit they'd enjoy from knowing. Because of this, I don't see an easy way to constrain the state from plundering data troves, either openly or surreptitiously. Ideally, folks would have a tidy set of received heuristics the way we have for kicking the tires on horses or looking gift cars in the mouth. Expecting politicians to constrain leviathan is very much petitioning the fox to guard the henhouse. Asking merchants to police themselves ignores the logic of competition. It's a caveat civis world. Understand that anything you do that enters a computer system (which is pretty much anything) is subject to surveillance. Assume your BATNA accordingly.

The Horrible Truth about Net Neutrality

My friends, I had not intended to discuss this controversial subject at this particular time. However, I want you to know that I do not shun controversy. On the contrary, I will take a stand on any issue at any time, regardless of how fraught with controversy it might be. You have asked me how I feel about net neutrality. All right, here is how I feel about net neutrality:

If when you say net neutrality you mean the crony's crowbar, the monopolist's schmooze, the crook's corruption, that empowers cozy insiders, throttles competition, destroys the urge to innovate, creates misery and poverty, yea, literally takes the wifi connection from the laptops of little children; if you mean the evil regulator-is-the-regulated revolving door we have in this present day in the provision of utilities that topples the Christian man and woman from the pinnacle of righteous, gracious living into the bottomless pit of degradation, and despair, and shame and helplessness, and hopelessness, then certainly I am against it.

But, if when you say net neutrality you mean breaking the de facto local monopoly, restoring to the hearths and homes of this great nation the liberty of its people to choose their own ISP, the laughter on a child's lips when Bob the Builder on Netflix comes streaming in with no buffer wheel, and the warm glow of contentment in their eyes; if you mean the cheer of customers when telecoms obliged by the harsh discipline of competition to provide the best possible service at prices agreeable to the public; if you mean the streaming content that puts the spring in the old gentleman's step on a frosty, crispy morning; if you mean the regulatory philosophy which enables a man to magnify his joy, and his happiness, and to forget, if only for a little while, life's great tragedies, and heartaches, and sorrows; if you mean that trust-busting urge, the implementation of which pours into our homes untold millions of gigabytes of content, which are used to provide in-home education via Khan Academy, Marginal Revolution University, and the like for our little crippled children, our blind, our deaf, our dumb, our pitiful aged and infirm; to reclaim telecom right-of-way for the good of the public, then certainly I am for it.

This is my stand. I will not retreat from it. I will not compromise.

Dear Mr. Arsenault

Order to Cease Manufacturing of HCT/Ps - Trent Arsenault
November 1, 2010

I am not making any of this up.

Fremont, CA resident T. Arsenault found himself on the business end of a cease-and-desist order from the FDA of all august organizations to quit selling his, um, genetic material over the Internet in 2010. Click the link for a more glorious timeline.

After a surprise inspection, the FDA found: "your Establishment does not provide adequate protections against the risks of communicable disease transmission through the use of these HCT/Ps."

HCT/P stands for "human cells, tissues, and cellular and tissue-based products."

Mr. Arsenault provides the same services as a sperm bank, but without all the regulatory hassle. It's the Craigslist of sperm donation, though he does claim to be a virgin and posts recent, dated STI test results on his site.

Curious: Mr. Arsenault could presumably visit recipients in person, impregnate them locally in the old-fashioned way and continue on his merry way—a modern-day Johnny Appleseed—without incurring the attentions of the FDA. Correct?

Does the fact that this procedure is done remotely increase the risk of infection?

Does the exchange of money increase the risk of infection?

How is this anything but a private contract between two consenting adults? Where is the public interest? I don't see the moral intuition. If it's okay for a woman to get pregnant, the specific mechanism should be her choice.

Right?

Today's SCOTUS decision on Hobby Lobby sure seems to be generating some moral outrage. This bullying by the FDA seems at least as bad. What's the difference? Is coercion exercised by the state exempt from moral scrutiny in a way that "coercion" exercised by an employer is not? Why?

Club Goods, Networks, and Moral Obligation

Suppose you're not just popular because you're fun at parties or, like Mungo and me, look good in a string bikini. Suppose you're a well-connected celebrity academic, like Mungo, but not like me. Maybe you've got an extremely pleasant, tenured position at an institution you treasure in a part of the world that fits you just perfectly. Maybe it would take an Act of God to dislodge you from your big overstuffed comfy chair in your tastefully-appointed, yet delightfully cluttered office. Maybe you have no narrow, self-interested reason to obtain or maintain an account with a service like LinkedIn.

Should you do it anyway? Sure, you might not gain from it, but if you teach at an elite, or even just a middle-of-the-road graduate-degree-granting institution, your students, both current and former can use you as a particularly valuable node. If you even casually keep up with alumni, you have a much better idea of where to point students on the cusp of graduation. Moreover, you have a really good idea of who the best talent in the current crop of graduates is, much more so than can fit on a CV or can be easily communicated in a ten minute interview in a conference hotel room.

You're a club good. Your account is more than just merely euvoluntary. You generate a positive externality.

But the marginal cost to you of joining this probably exceeds the private marginal benefit. Ordinary relative price economics and Coase suggests that you should join and then be compensated by the beneficiaries. Of course, there's a bit of a dispersion problem that seems like it might wander a bit out of Ostrom territory. For most of the private common pool resource allocation solutions studied by Elinor and Vince Ostrom, there were good social ties that kept people from shirking. If you think it's worth it to subsidize Paul Krugman and Tyler Cowen's LinkedIn accounts, how would you design the subsidy? Who should bear the cost and how should it be administered?

If you give a good enough answer, I'll advertise it and who knows, you might get featured on MR.

Avast, Ye Scurvy Dogs!

American Teeth has a great piece on [IP] piracy that would fit right in here at EE. The crux of the argument:

If euvoluntary exchange is always just, then for piracy to be wrong it has to break one of the rules above. However, for piracy to be stealing, it has to break the same rule that stealing breaks, in the same way. This is where the argument that piracy is stealing breaks down, because, as I will show, stealing is a coerced transaction and piracy is a transaction with an uncompensated externality. It's a rule five [coercion by human agency] violation versus a rule four [uncompensated externality] violation. [emphasis in original]

To me, there are two parts to discussions of IP. There's the practical, consequential bit, summarized nicely in the Tabarrok Curve, and  there's the deontological, perhaps metaphysical question of ownership. When I buy a recording, am I buying the excludable media on which the non-excludable composition is imprinted? Am I buying an aetheric arrangement of airborne distortions? Am I buying the pleasure the music brings?

The consequential arguments are easy to address. It's an empirical claim whether or not online piracy impinges on the Income Statements of record labels. I'm not so sure the other questions can be answered quite so simply. The discipline of economics has a lot to say about the nature of ownership. Here's what probably the greatest microeconomist of the 20th c. wrote about property rights:

A property right is the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals. Society approves the uses selected by the holder of the property right with governmental administered force and with social ostracism. If the resource is owned by the government, the agent who determines its use has to operate under a set of rules determined, in the United States, by Congress or by executive agencies it has charged with that role.

Private property rights have two other attributes in addition to determining the use of a resource. One is the exclusive right to the services of the resource. Thus, for example, the owner of an apartment with complete property rights to the apartment has the right to determine whether to rent it out and, if so, which tenant to rent to; to live in it himself; or to use it in any other peaceful way. That is the right to determine the use. If the owner rents out the apartment, he also has the right to all the rental income from the property. That is the right to the services of the resources (the rent).

Finally, a private property right includes the right to delegate, rent, or sell any portion of the rights by exchange or gift at whatever price the owner determines (provided someone is willing to pay that price). If I am not allowed to buy some rights from you and you therefore are not allowed to sell rights to me, private property rights are reduced. Thus, the three basic elements of private property are (1) exclusivity of rights to choose the use of a resource, (2) exclusivity of rights to the services of a resource, and (3) rights to exchange the resource at mutually agreeable terms.

-Armen Alchian in The Concise Encyclopedia of Economics

This idea of alienability, that one of the most important, perhaps the most important stick in the bundle of rights, is absent (or at least muted) whenever whizzing electrons are involved is an interesting puzzle for folks like me who are interested in the intersection between philosophy, economics, and policy. The very notion of what conventional ownership is is at stake in this debate. It's tough to claim euvoluntarity when one of the core assumptions is at the crux of the squabble.

Swapping couches

Whether or not the internet marks the end of selfishness (see below), it certainly does allow for new kinds of exchange.

For example, Couch Surfing, where people opt into a global network and agree to let strangers sleep on their couch for a night in exchange for the right to sleep on other strangers' couches all over the world.

Some might look at this as a better use of available resources, but I think that misses the point a bit. It seems unlikely that a website that allowed people to rent out their couches for $5 a night would be far less popular.

Like organ donations and amateur athletics, hospitality is a sphere in which people feel uncomfortable involving money, even if exchanges involving money would improve overall welfare. Because couch surfing is potentially quite dangerous, though, this anti-money impluse might make a lot of sense; people are more willing to trust a stranger who is willing to trust strangers than a stranger with $5.

Charity as a substitute for reputation: evidence from an online marketplace, Daniel W. Elfenbien, Ray Fisman, Brian McManus, Review of Economic Studies, forthcoming.

Consumers respond positively to products tied to charity, particularly from sellers that

are relatively new and hence have limited alternative means for assuring quality. We

establish this result using data from a diverse group of eBay sellers who “experiment”

with charity by varying the presence of a donation in a set of otherwise matched product

listings. Most of charity’s benefits accrue to sellers without extensive eBay histories.

Consistent with charity serving as a quality signal, we find fewer customer complaints

among charity-intensive sellers.

(Thanks to Peter Jaworski for couch surfing)

The End of Selfishness

If people work for reasons other than self-interest, are they doing it voluntarily?

Will the internet be the "end of selfishness," or it finest flowering?

The article does pose an interesting "third way" question:

If neither the command-control systems dictated by the Leviathan nor the Invisible Hand of the free market can effectively govern society, where shall we turn?

Nod to Jay Larson