The complications of nostalgia

I watched George H.W. Bush’s funeral as it was streamed from the National Cathedral and interpreted it as his family’s determination to highlight the contrast between the 41st President and the current one. (It was pretty successful in those terms, but then the designers of the service were pushing at an open door, as the target of the comparison sat scowling and clearly bored by the proceedings.)

But other observers read more into it. Writing in The Atlantic, for example, Franklin Foer saw the obituaries as carrying

the longing for a time when American politics was ruled by men of “high character” and a sense of “public duty,” the very antithesis of the present partisan era’s coarseness.

What goes unstated, however, is the subtext of that yearning. All the florid remembrances are packed with fondness for a bygone institution known as the Establishment, hardened in the cold of New England boarding schools, acculturated by the late-night rituals of Skull and Bones, sent off to the world with a sense of noblesse oblige. For more than a century, this Establishment resided at the top of the American caste system. Now it is gone, and apparently people wish it weren’t.

When George H. W. Bush passed, so did the last true WASP. In appearance, he embodied what The New York Times’ Alessandra Stanley once called “The Presidency by Ralph Lauren.” The evocation of the legendary fashion designer was a sly bit of sociology—the old American aristocracy was already in decline, since its aesthetic had been commodified (by none other than Ralph Lifshitz) and made accessible to all in the democracy of the shopping mall.

Writing in the New York Times, Ross Douhat interpreted “Bush nostalgia” as

a longing for something America used to have and doesn’t really any more — a ruling class that was widely (not universally, but more widely than today) deemed legitimate, and that inspired various kinds of trust (intergenerational, institutional) conspicuously absent in our society today.

Put simply, Americans miss Bush because we miss the WASPs — because we feel, at some level, that their more meritocratic and diverse and secular successors rule us neither as wisely nor as well.

The WASP establishment was determined largely by bloodlines and connections. Writing in the Washington Post Fareed Zakaria, claims that you had to be a white Anglo-Saxon Protestant “to ascend to almost any position of power in the United States until the early 1960s” and asks “Surely, there is nothing good to say about a system that was so discriminatory toward everyone else?”

Actually, there is. For all its faults — and it was often horribly bigoted, in some places segregationist and almost always exclusionary — at its best, the old WASP aristocracy did have a sense of modesty, humility and public-spiritedness that seems largely absent in today’s elite. Many of Bush’s greatest moments — his handling of the fall of communism, his decision not to occupy Iraq after the first Gulf War, his acceptance of tax increases to close the deficit — were marked by restraint, an ability to do the right thing despite enormous pressure to pander to public opinion.

But, and here is the problem, it is likely these virtues flowed from the nature of that old elite. The aristocracy was secure in its power and position, so it could afford to think about the country’s fate in broad terms, looking out for the longer term, rising above self-interest — because its own interest was assured. It also knew that its position was somewhat accidental and arbitrary, so its members adhered to certain codes of conduct — modesty, restraint, chivalry, social responsibility.

Lots of problems with all of this, but an obvious one is that it’d be hard to describe the Kennedys as WASPS — not to mention the Roosevelts and the Vanderbilts (of Dutch origin), or the Rockefellers (who hail from stout German stock). And if we’re counting Germans, then surely the Trumps qualify? So the term WASP — White Anglo-Saxon Protestants — as “a social group of wealthy and well-connected white Americans, of Protestant and predominantly British ancestry, who trace their ancestry to the American colonial period” is probably more useful as a polemical term of abuse rather than as a precise description of a caste.

Tim Wu’s top ten antitrust targets

He writes:

If antitrust is due for a revival, just what should the antitrust law be doing? What are its most obvious targets? Compiled here (in alphabetical order) , and based on discussions with other antitrust experts, is a collection of the law’s most wanted — the firms or industries that are ripe for investigation.

Amazon
Investigation questions: Does Amazon have buying power in the employee markets in some areas of the country? Does it have market power? Is it improperly favoring its own products over marketplace competitors?

AT&T/WarnerMedia
Investigation question: In light of this, was the trial court’s approval of the AT&T and Time Warner merger clearly in error?

Big Agriculture
Over the last five years, the agricultural seed, fertilizer, and chemical industry has consolidated into four global giants: BASF, Bayer, DowDuPont, and ChemChina. According to the U.S. Department of Agriculture, seed prices have tripled since the 1990s, and since the mergers, fertilizer prices are up as well.
Investigation question: Were these mergers wrongly approved in the United States and Europe?

Big Pharma
The pharmaceutical industry has a long track record of anticompetitive and extortionary practices, including the abuse of patent rights for anticompetitive purposes and various forms of price gouging.
Investigation and legislative questions: Are there abuses of the patent system that are still ripe for investigation? Can something be done about pharmaceutical price gouging on drugs that are out of patent or, perhaps more broadly, the extortionate increases in the prices of prescription drugs?

Facebook
Having acquired competitors Instagram and WhatsApp in the 2010s in mergers that were arguably illegal, it has repeatedly increased its advertising load, incurred repeat violations of privacy laws, and failed to secure its networks against foreign manipulation while also dealing suspicious blows to competitor Snapchat. No obvious inefficiencies attend its dissolution.
Investigation questions: Should the Instagram and WhatsApp mergers be retroactively dissolved (effectively breaking up the company)? Did Facebook use its market power and control of Instagram and Instagram Stories to illegally diminish Snapchat from 2016–2018?

Google
Investigation question: Has Google anticompetitively excluded its rivals?

Ticketmaster/Live Nation
Investigation questions: Has Live Nation used its power as a promoter to protect Ticketmaster’s monopoly on sales? Was Songkick the victim of an illegal exclusion campaign? Should the Ticketmaster/Live Nation union be dissolved?

T-Mobile/Sprint
Investigation question: Would the merger between T-Mobile and Sprint likely yield higher prices and easier coordination among the three remaining firms?

U.S. Airline Industry
The U.S. airline industry is the exemplar of failed merger review.
Investigation and regulatory questions: Should one or more of the major mergers be reconsidered in light of new evidence? Alternatively, given the return to previous levels of concentration, should firmer regulation be imposed, including baggage and change-fee caps, minimum seat sizes, and other measures?

U.S. Hospitals
Legislative question: Should Congress or the states impose higher levels of scrutiny for health care and hospital mergers?
Investigation question: In light of this, was the trial court’s approval of the AT&T and Time Warner merger clearly in error?

Ireland’s need for a new narrative

Last Friday’s Irish Times carried a piece by Charlie Taylor based on an an interview I gave in which I argued that a country that had built its identity (and prosperity) largely on a policy of being nice to big multi-national companies might need a new narrative now that some of its more welcome guests turn out to be toxic.

Controlling digital giants: new ideas wanted

This morning’s Observer column:

The five biggest companies in the world are now all digital giants, each wielding monopolistic power in their markets. We are increasingly aware that some of their activities are socially damaging: they are deepening inequality, avoiding taxation, undermining democratic processes, creating addictive products, eroding privacy and so on. And yet, with the odd exception (mostly represented by the European commission), our societies seem transfixed by them, like rabbits paralysed in the tractor’s headlights. Politicians bleat about the need to do something about the digital giants, but so far it’s been all talk and no action.

This is strange because democracies have extensive legal toolkits for dealing with overweening corporate power. We have antitrust and competition laws, monopolies and merger commissions and federal trade commissions coming out of our ears. And yet – again with the single exception of the European commission – they seem unable to deal with the digital giants. Why?

The answer is partly historical and partly ideological…

Read on

So what’s the problem with Facebook?

Interesting NYT piece by Kevin Roose in which he points out that the key question about regulating Facebook is not that lawmakers know very little about how it works, but whether they have the political will to regulate it. My hunch is that they don’t, but if they did then the first thing to do would be fix on some clear ideas about what’s wrong with the company.

Here’s the list of possibilities cited by Roose:

  • Is it that Facebook is too cavalier about sharing user data with outside organizations?
  • Is it that Facebook collects too much data about users in the first place?
  • Is it that Facebook is promoting addictive messaging products to children?
  • Is it that Facebook’s news feed is polarizing society, pushing people to ideological fringes?
  • Is it that Facebook is too easy for political operatives to exploit, or that it does not do enough to keep false news and hate speech off users’ feeds?
  • Is it that Facebook is simply too big, or a monopoly that needs to be broken up?

How about: all of the above?

Why populism is thriving

Martin Wolf has a brilliant review of Adam Tooze’s Crashed: How a Decade of Financial Crisis Changed the World in Saturday’s FT ($). His review touches on two things in particular that have preoccupied me ever since the crash. One is the failure to hold those responsible to account; the other is about the way the losses run up by capitalist irresponsibility were then socialised — by loading them onto ordinary citizens. (If I remember correctly, the bailing out of the banks dumped a debt of Euro 30,000 on every Irish citizen.). The other was the way politicians conned the public into accepting that it was public excess rather than private greed that caused the crisis.

Two excerpts from Wolf’s review elegantly make these points. Here’s the first:

The scale and nature of the required response had significant political consequences. The public was enraged by the size of support for the banks and, even worse, by the payment of the bonuses apparently due to the bankers. This was made even more infuriating by the fact that hundreds of millions of ordinary people suffered by losing their homes and jobs, or by being the victims of post-crisis austerity. Many were also enraged that so few senior individuals were charged. The trust that must exist in any democracy between elites and everybody else collapsed. With trust gone, conspiracy-mongers and political mountebank had their day.

Yep. And here’s the second gem:

Perhaps most startlingly, conservative politicians in the US, the UK and Germany successfully reframed the crisis as the result of out-of-control fiscal policy rather than the produce of an out-of-control financial sector. Thus, George Osborne, Chancellor of the Exchequer in the UK’s coalition government, shifted the blame for austerity on to alleged Labour profligacy. German politicians shifted the blame for the Greek mess from their banks onto Greek politicians. Transforming a financial crisis into a fiscal crisis confused cause with effect. Yet this political prestidigitation proved a brilliant coup. It diverted attention from the failure of the free-market finance they believed in to the costs of welfare states they disliked.

Osborne’s hypocritical dishonesty made him, for me, the most loathsome politician in Britain. (Boris Johnson runs him close, of course, but whereas Johnson is loathsome-but-chaotic, Osborne is loathsome-but-coherent: he always believed in shrinking the state and was the brains behind Cameron’s leadership.) The idea of a trust-fund baby delightedly imposing economic hardship on poorer citizens turns the stomach. Just about the only good thing about Theresa May’s ascent to the premiership was the cool, calculated cruelty of the way she sacked Osborne.

All of which suggests that the best explanation for the waves of populism now breaking on our shores is simply that they are the long-delayed explosion of rage at the way people have been screwed by neoliberal capitalism. And the storm has some way to go before its force is spent.

Google, Facebook and the power to nudge users

This morning’s Observer column:

Thaler and Sunstein describe their philosophy as “libertarian paternalism”. What it involves is a design approach known as “choice architecture” and in particular controlling the default settings at any point where a person has to make a decision.

Funnily enough, this is something that the tech industry has known for decades. In the mid-1990s, for example, Microsoft – which had belatedly realised the significance of the web – set out to destroy Netscape, the first company to create a proper web browser. Microsoft did this by installing its own browser – Internet Explorer – on every copy of the Windows operating system. Users were free to install Netscape, of course, but Microsoft relied on the fact that very few people ever change default settings. For this abuse of its monopoly power, Microsoft was landed with an antitrust suit that nearly resulted in its breakup. But it did succeed in destroying Netscape.

When the EU introduced its General Data Protection Regulation (GDPR) – which seeks to give internet users significant control over uses of their personal data – many of us wondered how data-vampires like Google and Facebook would deal with the implicit threat to their core businesses. Now that the regulation is in force, we’re beginning to find out: they’re using choice architecture to make it as difficult as possible for users to do what is best for them while making it easy to do what is good for the companies.

We know this courtesy of a very useful 43-page report just out from the Norwegian Consumer Council, an organisation funded by the Norwegian government…

Read on

Implications of Facebook’s changed newsfeed curation algorithms

Interesting piece in *Slate about the impact of news publishers of Facebook’s new-found desire to escape from news.

Slate — yes, the publication you’re reading right now — got more than 85 million clicks that originated from external sites and apps in January 2017 alone. Almost a third of them — 28 million—came from Facebook. That was more than any other single outside traffic source. Other online publications with a political focus, such as Vox and Politico, posted similarly blockbuster numbers.

It was, in retrospect, the zenith of Facebook’s influence over the news industry. Starting in about 2013, when the social network began prioritizing actual news in users’ news feed rankings—the order in which posts appear when you scroll through its app or site—Facebook had grown increasingly critical to many media outlets’ business, for better or worse. Every visitor the social network sent to an outlet’s pages translated to much-needed ad views. And it sent so many that newsrooms remolded their editorial strategies to maximize clicks, likes, and shares on Facebook. For less scrupulous publishers, that sometimes meant sensationalizing headlines or framing stories in ways that pandered to people’s biases—a trend that Facebook tried to combat algorithmically, with limited success. By August 2016, the New York Timess’ John Herrman wrote that Facebook had “centralized online news consumption in an unprecedented way,” shaping how the public perceived politics by determining which stories they’d see in their feeds. And by 2017, some antitrust thinkers concerned with its centrality to the news business were calling for Facebook to be regulated as a monopoly.

A simplistic theory of political polarisation

From Bryan Caplan

Leftists are anti-market. On an emotional level, they’re critical of market outcomes. No matter how good market outcomes are, they can’t bear to say, “Markets have done a great job, who could ask for more?”

Rightists are anti-leftist. On an emotional level, they’re critical of leftists. No matter how much they agree with leftists on an issue, they can’t bear to say, “The left is totally right, it would be churlish to criticize them.”

Caplan explicitly calls it a simplistic theory, and it is. But it’s not bad as a first approximation — as George Hawley suggests:

If out-group hostility is more important to party identification than support for particular policies or ideologies, we may not actually place very many ideological demands on our parties. Defeating our enemies may be more important than advancing specific liberal or conservative agendas. According to Groenendyk: “If partisans’ identities are increasingly anchored to hatred of the outparty than affection for their inparty, electoral dynamics are likely much more fluid than many accounts suggest. Thus, insurgent candidates with questionable ideological credentials (e.g., Donald Trump) may be more appealing than one might expect in the age of ideologically sorted parties.”

The best question Zuckerberg was asked was the one he couldn’t answer

I agree with Dave Winer:

Senator Lindsey Graham asked Zuck the right question on Tuesday. Who are your competitors? The answer is they have none, though Zuck wouldn’t say that. That is the big problem. Solve it and all the others go away.

Zuck tried to laugh off the question, but the answer was as clear as day and he knew it. In the social-networking business, Facebook is the monopoly to end all monopolies.