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Uncategorized

Serpico

Came across this article by the Serpico in Politico in 2014. Makes fascinating reading in light of current events.

[A]n even more serious problem — police violence — has probably grown worse [than it was when Serpico was in the NYPD in the early 1970s], and it’s out of control for the same reason that graft once was: a lack of accountability.

. . .

Today the combination of an excess of deadly force and near-total lack of accountability is more dangerous than ever: Most cops today can pull out their weapons and fire without fear that anything will happen to them, even if they shoot someone wrongfully. All a police officer has to say is that he believes his life was in danger, and he’s typically absolved. What do you think that does to their psychology as they patrol the streets—this sense of invulnerability? The famous old saying still applies: Power corrupts, and absolute power corrupts absolutely.

. . .

And with all due respect to today’s police officers doing their jobs, they don’t need all that stuff anyway. When I was [a] cop I disarmed a man with three guns who had just killed someone. I was off duty and all I had was my snub-nose Smith & Wesson. I fired a warning shot, the guy ran off and I chased him down. Some police forces still maintain a high threshold for violence: I remember talking with a member of the Italian carabinieri, who are known for being very heavily armed. He took out his Beretta and showed me that it didn’t even have a magazine inside. “You know, I got to be careful,” he said. “Before I shoot somebody unjustifiably, I’m better off shooting myself.” They have standards.

Frank Serpico, The Police Are Still Out of Control, POLITICO Magazine, Oct. 2014.

Categories
Antitrust Monopolization Regulation

Getting Big

The realization that a tight monopoly is preferable under certain circumstances to a looser arrangement in which competition is present comes hard to a Western economist. Nonetheless, the preceding argument compels recognition that a no-exit situation will be superior to a situation with some limited exit on two conditions:

(1) if exit is ineffective as a recuperation mechanism, but does succeed in draining from the firm or organization its more quality-conscious, alert, and potentially activist customer members; and

(2) if voice could be made into an effective mechanism once these customers or members are securely locked in.

There are doubtless many situations in which the first condition applies . . . .

Albert O. Hirschman, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States 55 (1970).
Categories
Antitrust Monopolization Philoeconomica

Economic Plotting

The assumption that people behave rationally does a lot of work in economics, but perhaps its most important function is to allow economists to assume that mutually beneficial deals always get done. If a seller places a value of a $5 on a good, and a buyer a value of $10, the assumption goes, the seller and buyer will agree on a price somewhere between $5 and $10, and trade will take place, simply because the exchange is mutually beneficial.

Economists and their detractors have spent at least half a century tearing apart the assumption that good deals always get done, first through the lens of transaction costs, and later through behavioral economics. Transaction costs dealt only a glancing blow to the assumption, however, because additional costs don’t really undermine it. One can certainly accept that some deals do not get done because the cost of negotiating them–the legal fees, the time required to induce the other party to accept a particular share of the benefits generated by the deal, and so on–are too high, without giving up on the notion that good deals, defined to be those that are mutually beneficial after transaction costs are taken into account, still always do get done.

Behavioral economics has turned out to be harder to dismiss because it suggests that neither party to a transaction may actually want to execute mutually beneficial trades. If the seller doesn’t place the right value on his good, thinking it is worth $20 to him when instead it is worth $5, and the buyer thinks the good is worth $5 to him when instead it is worth $10, then the two will not be able to agree on a price, and so a mutually beneficial trade will not take place. But objections based on behavioral economics are not what interest me about the assumption that good deals always get done.

What is really interesting about the struggle over whether good deals get done is that economics has always needed the fact that some good deals do not get done to create the tension that gives economic inquiry its meaning. An economics in which good deals always get done is an utterly uninteresting, unrealistic, and indeed solipsistic undertaking. And economics has always understood that. Long before transaction cost economics and behavioral economics, economists were careful to build into their models discrete loci of irrationality in order to give the models meaning. Without these areas of irrationality, the models would lack what a creative writing teacher would tell you is the essential element of any story: conflict.

But if a novelist were to try to introduce tension into a plot this way, by asking the main character to treat similarly situated supporting characters differently for arbitrary and unexplained reasons, the novel would be panned.

Consider, for example, as doctrinaire and orthodox a model as the general equilibrium model of Arrow and Debreu. If these men had really taken the assumption that all good deals get done seriously, they would have started with a bunch of households and firms, written down their utility and production functions, and then: bam! The model would have been done. For the assumption that all good deals get done would then have ensured that all trades that, according to the utility functions and production functions they had written down, are mutually beneficial, would then immediately be carried out.

To give the story the conflict it needs to be of interest, Arrow and Debreu added another assumption: that prices are uniform in all markets. (This assumption does not of course originate with them, but their model represents a sort of apotheosis of orthodox economics, making it useful to frame the discussion around it.) Uniform pricing creates tension because when prices are uniform a seller can make more money by intentionally refusing to sell to certain buyers, even when those sales would be mutually beneficial. This is the classic problem of the inefficiency of the uniformly-pricing monopolist.

Consider a seller who places $5 of value on a good and has two prospective buyers, one who places $100 of value on the good and the other who places $10 of value on the good. Without the uniform pricing restriction, the seller would always sell to both buyers, because whatever profits he happened to generate from his sale to the first buyer he could always increase by selling to the second buyer as well.

That changes with uniform pricing, because then the price the seller charges the first buyer must be the same as the price the seller charges the second buyer. If the seller is able to negotiate a price of $95 with the first buyer (a price the first buyer will, under the all-good-deals-get-done assumption, accept because he places a value of $100 on the good, and so would enjoy a net gain of $5 from the deal), then the seller will not sell at all to the second buyer, who is only willing to pay up to $10 for the good and therefore won’t buy at a price of $95. So a deal with the second buyer becomes impossible, even though, if a lower price could be charged to the second buyer, a deal would be mutually beneficial. If the seller and the second buyer could agree on a price of $7, for example, the seller would earn an additional $2 of profit.

But that price is impossible under uniform pricing, because to charge the second buyer $7 would require that the seller charge the first buyer $7 as well, eliminating $83 of profit from the deal with the first buyer relative to the $90 earned at a price of $95, in exchange for a paltry gain of only $2 in profit on the second deal. The seller could still ensure that all good deals get done, by charging that $7 price, or any price between $5 and $10, but it is not in the interest of the seller to do that.

Now the Arrow and Debreu model has the opportunity to become interesting, by giving the conditions under which all mutually beneficial deals will still get done, in spite of the uniform pricing restriction and therefore in spite of the failure of the assumption that all good deals get done as a general matter. In particular, the Arrow and Debreu model makes clear that perfect competition, or some other mechanism that leads to competitive prices, is required for all good deals to get done when prices are uniform. Competition ensures that if one seller tries to charge $95, the $90 in profits generated thereby will induce other sellers to enter the market and steal the buyer’s business by charging a slightly lower price, and as competition intensifies that price will be bid down to the $5 of value that sellers place on the product, ensuring that the second buyer is able to purchase the product as well. All good deals get done after all. By circumscribing the assumption that good deals always get done using a restriction that is realistic–many goods are sold at uniform prices–the model poses a problem that has a certain verisimilitude–how to ensure that all good deals get done when prices are uniform–and then gives the conditions sufficient to solve the problem (e.g., competitive markets).

All economic models follow the same playbook: all economic models create tension and practical interest by limiting the general economic assumption that all good deals get done in some way (usually, but not always by assuming that prices are uniform), and then trying to show what legal rules or policy interventions might be needed to ensure that all good deals do get done anyway. (Another example is the assumption of risk aversion in insurance economics.)

What is so peculiar about this rhetorical posture of economics is that the baseline assumption is always that good deals do always get done, and the model is then built around the introduction of some discrete deviation from that assumption. The model never starts from the assumption that good deals never get done.

Which gives all economic models an internally discordant character.

Why, for example, should I assume that when the monopolist charges $95 to the first buyer, that buyer will magically trade at that price, simply because trade is mutually beneficial, but at the same time I should also accept that the seller won’t try to charge a lower price in order to be able to engage in mutually-beneficial trade with the second buyer? Yes, the seller generates more profit by charging the higher price and selling only to one buyer. But by the same token, the first buyer could enjoy a greater net gain from the transaction by insisting on paying no more than $80 for the good, as opposed to the $95 price that I am asked to assume that the buyer will accept. The buyer does better insisting on a lower price, and if the seller insists on a higher price, then the two might never reach a deal, as Robert Cooter so insightfully pointed out years ago. I am therefore asked to accept that the profit motive is not the be-all-and-end-all for the seller and the first buyer, otherwise I could not assume that the good will sell at $95, and yet I am asked to accept that the profit motive is the be-all-and-end-all for the seller in relation to the second buyer, which is why the seller won’t think twice about pricing the second buyer out of the market and missing an opportunity for mutually beneficial trade with the second buyer. Why ever would that be the case?

Of course, it is in the nature of the introduction of a deviation from the assumption that good deals always get done to have such dissonance. But that just begs the question: does it make sense to rely upon inconsistent behavioral assumptions within the same model?

Keep in mind that in order for uniform pricing to give rise to tension in the Arrow and Debreu model, the same individual seller must be willing to compromise profits for the sake of completing mutually-beneficial transactions with buyers who are willing to pay high prices–inframarginal buyers, they’re called–but not be willing to compromise profits for the sake of completing mutually-beneficial transactions with buyers who are able to pay only lower prices–marginal buyers, these are called. There seems to be no basis for assuming that sellers are socially oriented with respect to inframarginal buyers but rapaciously-profit-driven with respect to marginal buyers, other than the rhetorical need of model builders to introduce tension into the stories they are telling about economic activity.

But if a novelist were to try to introduce tension into a plot this way, by asking the main character to treat similarly situated supporting characters differently for arbitrary and unexplained reasons, the novel would be panned. The trouble for economists is that if they start adding content to the personalities of economic actors, they end up falling down the behavioral economics rabbit hole. There are too many different personality types from which to select , and the mathematics required to build models in any case becomes intractable. But if economists stick with the basic assumption that all good deals get done, then they paint a Panglossian portrait of economic activity that leaves them unable to identify economic problems or solve them. The result is an economic theory built on arbitrary and self-contradictory assumptions about when deals get done.

A more tenable theoretical approach would be to accept that good deals don’t always get done, all the time, in all circumstances. That means that even in competitive markets, sellers will fail to sell to buyers at the market price. That also means that in monopoly markets, sellers may fail to sell to inframarginal buyers at the monopoly price. Laying off absolute assumptions regarding whether deals always get done should also release economics from going to the opposite extreme: assuming that when good deals do not always get done good deals must therefore never get done. Which means that we should not be surprised to come upon monopolists that charge competitive prices.

Jettisoning absolute assumptions about whether good deals get done would prevent economics from making grand claims, such as the claim of the Arrow and Debreu model that competitive markets are always efficient. But it would not make economic theory useless. Economic theory could still tell us plenty about potentials: such as the amount of gain that would be created were policymakers to encourage buyers and sellers to strive to make mutually beneficial deals whenever possible. (Guido Calabresi makes a similar point when he argues that economics should focus less on how to expand the production possibilities curve and more on how to get the economy to that curve.) It would also help explain economic institutions that economics has so far been unable to penetrate.

Like advertising. The classic economic explanation for advertising is that it provides consumers with useful product information, something that is almost impossible to believe in the information age, if it ever was credible. But in a world in which good deals don’t always get done, there is another potential economic justification for advertising: that it seeks to overcome whatever cognitive or bargaining failures otherwise prevent good deals from getting done. In a world in which mutually beneficial transactions don’t always happen, because consumers are irrational, one would expect to find sellers spending large amounts of money trying to cajole buyers into buying, even in situations in which the deals on offer are good for buyers and so in theory they should embrace them without needing to be persuaded to do so. (That would go some ways toward undermining my own argument here that persuasive advertising must be bad for consumers, because absent advertising rational consumers always purchase the products that are best for them.)

There’s nothing wrong with the use of simplifying assumptions in economics, or in thought of any kind. But the use of inconsistent assumptions about behavior in the same model–often in relation to the same economic actors in the model–is a different story.

And all of economic theory is based upon doing just that.

Categories
Antitrust Monopolization Regulation

Fairly Balanced

Ben Smith must be congratulated for writing one of the few accounts in the Times of the battle between Big News and Big Tech even to acknowledge that there are two players in this fight, and that both are pursuing their own private interests, not necessarily the public interest.

Smith gets it right when he observes that: “The battle between [tech] platforms and publishers is . . . an old-fashioned political brawl between powerful industries.” Contrast that to “To Take Down Big Tech, They First Need to Reinvent the Law,” the headline of a story that appeared in the Times last summer, and you see why there is cause to celebrate this tick back in the direction of balanced journalism.

Of course, there’s still a long way for the Times to go before it stops using its bully pulpit to advance the industry’s own narrow pecuniary interests, and starts giving its readers a complete picture of what’s at stake in the battle between the media industry and Facebook, Google, and Amazon.

Smith follows a popular playbook in the press’s attempts to drum up political support for smashing its tech rivals: lionizing those who help them. No doubt this is the first time that Australian competition regulator Rod Sims has been called a “pugnacious 69-year-old” defending the public against “railroads, ports, and phone companies.”

And no doubt American regulators get the message: take the media’s side and the media will talk you up too.

But Smith really does deserve kudos for trying to be balanced. After all, he comes out and says it: “politicians remain eager to please the press that covers them.”

And: “[T]he power of the press, even nowadays, makes it a formidable political force. Rupert Murdoch’s bare-knuckled News Corp . . . has long led the fight to claw back revenue from the tech giants, and hostility to Google bleeds through the pages of The Times of London and Fox News’s airwaves.”

Of course, the same hostility “fairly bleeds” through the pages of the The New York Times as well. But it would be asking too much for the Times itself to acknowledge that.

I do wish though that Smith would drop a link when he goes on to observe that “much of the American media rejects the idea that it is crusading in its pages to support its publishers’ business agenda.” Last I checked, no one of any prominence had even called out the media for the brazen, self-interested, savaging of big tech that has been running above the fold in newspapers across the country for several years now.

Much less have I read a rejection of such criticism authored by any editorial page anywhere. The press is still a long way away from coming clean to its readers about this issue. All the more reason to thank Smith for finally acknowledging that there is a conflict of interest.

You also have to admire this bit of very journalistic commentary-through-juxtaposition in Smith’s piece: “Facebook, after taking a huge public beating for its role amplifying misinformation . . . has moved to give publishers what they want: money, mostly . . . . writing checks in the seven figures to publishers.” You’d have to be a very dull reader indeed not to see “shakedown” blinking here in red, all caps.

But I haven’t said a word yet about the actual subject matter of Smith’s piece.

It’s this: the media industry has been arguing that Google and Facebook should pay newspapers for the links to news stories that Google provides on its search engine and that Facebook users spend endless hours sharing and discussing on Facebook. And the industry has made some headway in convincing government regulators in Australia and France to mandate such payments.

But is there a good argument for making Google and Facebook pay? Although there have been attempts to spin the problem of compensation into a copyright question — is a snippet of text from a news article included in a Google search result subject to copyright by newspapers? — the basic argument is that Google and Facebook would be a lot less valuable to their users if there were no journalism out on the internet for Google to help users find and for Facebook to help users share.

It follows that newspapers are contributing value to Google and Facebook, and should therefore receive compensation for that value.

The trouble with this argument is that there is no general rule that anyone who receives value from someone else should pay compensation for it. Imagine if you had to pay every pretty face you encountered on the street for the pleasure you take in a glance. There’s no doubt that Google and Facebook would be a lot less useful if there were no world for Google to reproduce in search results or for Facebook users to discuss on Facebook. That doesn’t mean that Google and Facebook should be made to pay all of their revenues out to the whole world in exchange for the value the whole world contributes to Google and Facebook’s websites.

The rule that policymakers actually do follow is to try wherever possible to ensure that those who produce value are paid enough to cover their costs of producing that value. That’s not at all the same as requiring full compensation for all the value producers confer on others.

That is, the basic rule on when to recognize a right to payment–otherwise known as a property right–is that producers of value should have enough of a right to payment to cover their costs. Because that is enough to ensure that they have the resources necessary to continue to produce the valuable things that they make. But beyond that, no one has, or should have, a right to payment simply in virtue of having conferred value on others.

Otherwise, no one could get any enjoyment out of the works of others! If a firm creates $10 of value for you, you would then be required to pay $10 of value back to the firm, for a net gain of zero. Clearly, a rule that value conferred must give rise to compensation simply because value has been conferred is unworkable.

The newspaper industry may be wrong to argue that value conferred gives rise to a right to payment. But the industry does, however, have a good case that at present it is not receiving even enough compensation to pay its costs of production, which suggests at least that it should have a right to more compensation from someone. Local newspapers across the country are shuttering. And the big papers that remain have had to sacrifice care and balance in their reporting in order to attract readers and protect their bottom lines. While the industry still takes in enough revenue to produce news, it no longer takes in enough to produce news of optimal quality.

But it is far from obvious that Google and Facebook should be the institutions to pay the costs of better journalism. True, those two companies now earn the advertising revenues that once sustained the media industry. But that’s because Google and Facebook distribute advertising better than do newspapers, not because Google and Facebook have used monopoly power to strike down more-innovative newspaper rivals.

And anyway the vulnerability of the newspaper industry to competition from Google and Facebook–two companies that don’t, actually, produce any news of their own–points to a deeper problem that can’t be solved by forcing these firms to subsidize the newspaper industry: that the market in which the media industry generates its revenues isn’t actually the market for news.

It’s the market for advertising.

That has always been a huge problem for newspapers, because a newspaper’s core mission is to tell the truth, whereas advertising’s core mission is to manipulate consumers into buying products they would not buy otherwise, and the more so in the information age. It makes no sense to fund an industry devoted to arming the public against manipulation–political and otherwise–through the distribution of commercial attempts to manipulate the public.

Which is why addressing the current jeopardy of journalism by tying newspapers back into advertising revenue streams, generated now through the medium of Google and Facebook, would represent a lost opportunity–to wean the newspaper industry off of dirty money.

What governments should be doing to save journalism is to set up direct government subsidies for newspapers, the way many Western European countries, and Britain, have long subsidized television news through a dedicated tax.

Detractors of this approach warn that government support could compromise journalistic independence. But here’s the thing: if Congress rides to the industry’s rescue by passing legislation advocated by the News Media Alliance that would allow the industry to negotiate compensation from Google and Facebook, that too would be a government subsidy. Few are under any illusions about that fact, not least the journalists who are currently busy rewarding friendly politicians with positive news coverage. A hostile President, or Congress, won’t think twice about demanding good press in exchange for support for such legislation. Indeed, that’s exactly what politicians who are backing the legislation are already getting in exchange.

If we’re getting government-subsidized media either way, we should at least get it without the advertising, and the additional layer of conflicts with commercial interests that entails.

Of course when, as Smith reports in a different piece, “[t]he most heated debate in places where . . . nonprofit news executives gather . . . is whether it’s ever safe or ethical to take government funding,” not whether it’s safe or ethical to take money from corporate interests in exchange for running corporate propaganda, there seems to be little hope for this approach.

Smith writes that the war between Big News and Big Tech is not just about private interests but also about “economic principle.” He’s right that the newspaper industry has tried to cast itself as the nation’s last line of defense against monopolization of the economy by the tech giants. But this craven and profoundly disingenuous appeal to the public interest was belied from the start by the industry’s advocacy of legislation that would allow newspapers to cartelize in violation of the antitrust laws in order to negotiate payments from the tech giants.

Demanding a cut of a monopolist’s profits is not the modus operandi of an industry committed to competitive markets. A News Corp. executive’s quip to Mark Zuckerberg about Facebook’s capitulation to modest payments–“what took you so long?”–says it all.

Of course, newspapers have also pressed for breakup of the tech giants, which is more like what one would expect from genuine antimonopoly advocates. But that, like all the bad press newspapers have heaped on Big Tech over the past few years, has just been about maintaining a bargaining position, the stick required to scare Google and Facebook into opening their wallets.

Once Big Tech does cut in the newspapers, don’t hold your breath waiting for the newspaper industry to continue the crusade for greater competition in America.

Categories
Civilization Regulation

Read It in the Sands

Anyone still skeptical about the usefulness of regulation as a general matter ought to consider the contrast between archaeology and treasure hunting. By which I mean, the triumphs of Twentieth Century state-sponsored archaeology and the failure of the preceding millennia of free-market treasure hunting.

Categories
Miscellany

War on Credit

When people are not trusted, their words, I notice, merely drift about without force in themselves and without inspiring confidence in others. But when people are known to have a respect for the truth, their words are just as powerful as other people’s force in securing any object at which they aim. If they want to bring anyone to a proper sense of his position, I know that threats from them have just as much of a sobering effect as actual punishment inflicted by others. And if people of this sort make promises, they gain their ends just as successfully as others who pay out money on the spot. Think of your own case. How much did you pay us before you gained our alliance? You know that you paid nothing at all. No, we trusted you and believed you would be true to your word, and so you raised a great army to march with you and gain you an empire worth not only the thirty talents, which our men think they should be paid, but many times as much. First of all, then, it is this feeling that you can be trusted–the thing which won you your kingdom–which is being bartered away for this sum of money.

Xenophon, The Persian Expedition 341-42 (Rex Warner trans., Penguin Books 1972).
Categories
Annals of American Decline Meta

On Mastering a Profession

The Federal Trade Commission Building.

I always did wonder how we lost the glory of Main Justice. Or the Federal Trade Commission. I should have known that, as with all things in modern life, the reason can be found in some stray bit of official text: “The design must flow from the architectural profession to the government. And not vice versa.” It will be fun to watch the AIA try to argue that anyone–anyone–except card-carrying members thereof actually likes the profession’s contemporary output. To read “Benjamin Forgey, the former architecture critic for The Washington Post,” pointing to I.M. Pei’s addition of a “triangular design influenced by modernist thought” to John Russell Pope’s Roman-Pantheon-inspired National Gallery of Art is to get a premonition of just how badly this is going to go for them. Of course, I’d rather not have the next federal building look like Trump Tower. But are the greatest examples of contemporary academic architecture any better? Is Dancing House really better? It’s not all that hard imagining that he might have designed it.

But this, to choose an example of beautiful architecture at random, is better. And would be covered by the executive order.

Categories
Coincidence

A Self-Endorsement?

The two candidates endorsed by The New York Times for president also happen to be the two most likely to advance the press’s antitrust campaign against Big Tech. One more than the other, to be sure. Just saying.

Categories
Antitrust Monopolization

More on the Warren Platform Fallacy

I have argued elsewhere that Elizabeth Warren’s proposed rule that firms not be allowed to compete on their own platforms makes no sense because a platform is just a production input, and all firms must own at least some of their inputs in order to exist. Does your company own its own office computers? Then it competes on its own platform.

But even when a company doesn’t compete on its own platform, the company will often have exactly the same incentive to favor some platform users over others that Warren seems to want to eliminate through her proposed rule.

Consider a shopping mall. The owner of the mall will not typically own any of the stores that lease space in the mall. So the mall owner doesn’t compete on its own platform. (At least not on the mall platform, but certainly on others. The mall owner doubtless owns a few computers.)

But even so, the mall owner does still have an incentive to favor some of its lessees over others, just as the owner would have an incentive to favor its own stores over those of competitors if the owner were to integrate downstream into retail and compete on its own platform. Suppose, for example, that the mall owner has a history of being able to negotiate more favorable lease terms from one restaurant in the mall than from another. The mall owner might then have an incentive not to renew the lease of the other restaurant, in order to make way for expansion of the first.

The lesson here is that whether a platform owner competes on its own platform or not, the owner will have a financial interest in all of the firms that do compete on the owner’s platform (because they all must pay the owner for access), and that interest is unlikely to be equal across all competitors on the platform. Indeed, a platform owner’s financial interest in a particularly profitable client is no different in effect than a platform owner’s financial interest in a business that the owner owns.

If we are not troubled by the fact that a platform owner that does not compete on its own platform will regularly use its power to pick winners–which is just was a mall owner does when it refuses to renew the lease of one shop, but continues that of another–then we should not be troubled by the fact that a platform owner that does compete on its own platform will sometimes favor its own businesses over those of competitors.

It seems fairly clear that what really bothers Warren is not that as a general matter platforms have an incentive to pick winners, whether themselves or others, on their own platforms, but rather that some specific platforms, like Amazon, may not be wielding that power wisely, or perhaps have so much power that government oversight of their decisionmaking is appropriate.

But the solution to that problem is not to gin up a broad general principle, like the one that no firm should be able to compete on its own platform, and then let that principle loose to wreak havoc across the economy. The solution is to empower a regulatory agency to supervise the platform in question, and decide, in light of the specifics of that particular business, whether intervention to supervise the platform’s choices is warranted.

That’s what the FCC did forever with respect to AT&T, back when AT&T was the nation’s only telecommunications platform. And that’s what can be done with Amazon, or other tech giants, to address concerns about possible arbitrary use of platform power.

Categories
Miscellany

The Capital Snub

My colleague Brian Frye launches an eloquent attack on the norm against plagiarism (Jot here). But his real target, I think, is the academic ego, and I wonder whether deflating it doesn’t require stronger, rather than weaker, norms.

Economic systems generate value by creating incentives for people to undertake productive activity. In market economies, we do that by giving firms property rights in what they produce. That ensures that firms that produce what consumers want can insist upon payment, and those payments in turn serve as the means by which consumers reward good behavior and ultimately dictate what the economy should produce.

The system falls apart, however, if the signals consumers send to firms through their purchase decisions don’t get routed properly to those who are best able to respond to them. If consumers want more grapes and less tonic, then grape producers need to get the “produce grapes” signal and tonic producers need to get the “stop producing tonic signal.” If tonic producers get the “produce grapes” signal, then more grapes won’t be produced and the system will fail.

The anti-plagiarism norm is just another approach to achieving proper routing of incentive signals, one that is optimized for the production of ideas in which the academic community engages. Academia creates incentives for scholars to produce work that is useful to the community by rewarding influence, rather than mere fact of making something that others are willing to acquire and read, as the market might do. Scholars who generate ideas that other scholars find useful, in the sense that other scholars see fit to discuss the ideas or build upon them, receive promotions and appointments at the most prestigious institutions.

In order for this system to function, faculty promotion and hiring committees must be able to measure influence. They do that by counting citations–the number of times that other scholars have referred to a particular scholar’s work–and by evaluating placement, meaning the prestige of the journals or academic presses in or with which the scholar publishes work. Influence implies originality; a scholar who uses another work to influence a third party merely serves as a conduit for the influence of the other author. Because editors select texts for publication based on originality, placement measures the promise of influence. The editor’s decision to publish at once signals the editor’s belief that the work should exert influence and helps the work toward that end, by giving the work a prominent display.

The anti-plagiarism norm facilitates the measurement of influence, by making it easier for promotion and hiring committees accurately to count instances in which the work of one scholar has been relied upon by other scholars. It also makes it easier for journal editors to determine what part of a scholar’s work is original and what part not. A scholar who scrupulously cites to the work of others whenever the scholar has relied upon it enables committees evaluating those other scholars to observe that the first scholar has been influenced by them. And a scholar who scrupulously cites to the work of others also enables editors to determine quickly the extent of the scholar’s own original contribution to the field. Eliminating the anti-plagiarism norm would make citation counts and placements less accurate measures of influence.

Which is why plagiarism makes scholars so angry. Every failure to cite causes the metrics upon which committees measure influence to diverge from actual influence, with the result that influence, the very end of scholarship (in the sense that truth in science is measured by acceptance), is not rewarded.

I’m tempted to add here that plagiarism makes academics angry because it’s theft. But plagiarism isn’t theft, because academics don’t own ideas, as Brian rightly points out, and the incentives system academics employ is in any case not a market-based incentives system. Plagiarism is only like theft, and gives rise to anger that is only like the anger aroused by theft, in the sense that plagiarism subverts the academic incentive system in the same way that theft subverts the market’s incentive system. A consequence of theft is that you are deprived of what you deserve, because you worked to produce it, or to generate the money you needed to buy it. And that makes you angry. A consequence of plagiarism is that you are deprived of the promotion or job that you deserve, because you generated sufficient influence to merit the promotion or appointment. And that makes you similarly angry.

So plagiarism is like theft, but still remains its own separate kind of transgression. Indeed, I’d hazard that plagiarism is a more dangerous offense, more likely to elicit a cruel response from its victim, than mere theft, because plagiarism is in the mode of a snub. To snub is to ignore, shun, count out. It inflicts a social wound, in contrast to theft’s harm to property. Social wounds cut deeper.

Although Brian at points acknowledges the limits of the property metaphor, at other points he embraces it. He writes that “academics want to own ideas. Copyright is useless to them, because it can’t protect what they want to own. So they create plagiarism norms that give them what they want, when copyright can’t provide.”

But academics don’t want to own their ideas. Indeed, they give them away for free. They do, however, want credit for them toward promotion and hiring, and perhaps in the eyes of posterity, which is why they decry plagiarism. The anti-plagiarism norm does not erect a property system, but it does facilitate a more accurate accounting of the performance of scholars.

One way to test this incentives account would be to see whether scholars tend to object more to plagiarism in academic work than to plagiarism in media that promotion and hiring committees, or academic peers more generally, do not usually consult.

I suspect that they do. If a high school student plagiarizes my scholarly work for a term paper that only a high school teacher will ever read, I am unlikely to become angry. I might even be flattered that my work has percolated so far. But if a scholar plagiarizes my work in an academic publication, I will be angry. The reason the high schooler gets off is that the value of my influence on him to promotion and hiring committees is zero.

Now, the student’s high school teacher might well object to the student’s plagiarism. But that is consistent with my incentives account. Because the plagiarism undermines the classroom incentives system, even if it does not undermine the academic incentives system. To induce students to do original work, the high school teacher must be able to identify original work, and reward it. Plagiarism undermines the high school teacher’s ability to do that.

The incentives theory also explains why ghostwriting often does not run afoul of the plagiarism norm. The anti-plagiarism norm comes into play only where non-market-based reward systems are concerned. When the only rewards desired or received are through the market, plagiarism is not needed for proper routing of incentives, because the market handles that. So for example the ghostwriting of autobiographies or romance novels raises no hackles because the nominal authors are not going to win any writing awards, or generate any esteem as serious literary figures. These books are written for profit. Nothing more.

But I’m sure that a winner of a Pulitzer or Nobel who relies on ghostwriting would come in for serious censure. Because those awards are about creating incentives for authors to engage in original, influential writing. An author who gets the award despite not having made such contributions takes the award from someone who did make real contributions, and thereby subverts the incentives system.

It’s no use arguing in response that the incentives theory doesn’t fit because a ghostwriter has by definition voluntarily renounced any claim to recognition, and indeed may well be content to create great works without any non-financial incentives whatsoever. Because there must be someone else out there, some other author, who has produced great original work, and who did it in hope of receiving the award. That other author will not get the award because it has gone instead to the undeserving employers of the ghostwriter. So an incentive will still have been lost, routed incorrectly.

I cannot therefore agree with Brian that the differential treatment of ghostwriting suggests that “plagiarism is a crime only when it harms the economic interests of authors, but is fine when it benefits them.” Plagiarism is a crime when rewards are doled out based on influence, but not, as in the case of most ghostwriting, when rewards are doled out only based on consumer demand. In that latter case, the market system is at play, and the goal is to reward those who bring products to market that consumers like best. Unless consumers care how the product is produced, and for most ghostwritten work they don’t, copyright is all that’s needed to ensure that those who bring what consumers want to market get rewarded for doing it.

(Occasionally consumers do partake of the cult of authorship and demand that authors not be ghostwriters, in which case a failure to disclose ghostwriting feels, to the consumer, like fraud. This, I suspect, is the origin of the mistaken notion that the anti-plagiarism norm is really an anti-fraud norm. As Brian rightly points out, plagiarism is actually rarely about protecting the reader as a general matter. It is instead, as I have been arguing here, about ensuring that authors are properly rewarded for influence in those communities, such as academia, in which influence is valued.)

The incentives theory also explains why there is no plagiarism norm in court filings. Lawyers, like academics, do strive to influence others through their work, but lawyers’ targets for influence are judges. And judges make clear enough, to the clients who dole out rewards to lawyers, whether their lawyers are influential, by ruling for or against. You don’t need to count cites here, just wins.

Brian asks: “Can I consent to plagiarism? Or rather, do academic plagiarism norms permit me to consent to plagiarism? If not, why not?” The answer, he points out, is of course no. But I do not fully understand his argument that the reason for this “no” is that the anti-plagiarism norm amounts to “cartel rules.”

Academia is not an idea cartel. Cartels restrict output, and thereby drive up price. But academics don’t restrict the output of their ideas in order to extract a higher price from those who buy them. Academics give their ideas away for free. Scholars don’t agree not to publish papers, for example, until the public, or university administrators, consent to pay more for those ideas.

One might argue that universities use common hiring standards artificially to restrict the number of academics they hire, and that this in turn restricts the supply of ideas, since it is difficult for those not employed in academia to find time to produce and disseminate ideas. But universities do not sell their faculties’ ideas. Students pay for teaching. They don’t pay for research. To the extent that there is a hiring cartel (and I don’t think there is), it profits by rationing teaching, not scholarship, which makes the cartel analogy unsuitable to a discussion of the anti-plagiarism norm.

If what Brian means by cartel rules, however, is only that the anti-plagiarism norm is a rule by which a community structures a system of incentives for its members, then I am in agreement. And this does explain why neither Brian nor anyone else can authorize others to plagiarize his work. While many authors do get angry when the norm is violated, the norm is there ultimately to benefit the community, not any one member thereof. Promotion and hiring committees want not only to know that Brian wrote his article attacking the anti-plagiarism norm, but, even if Brian does not care to receive a reward for it, also to know that whoever plagiarized the article did not write it, and therefore should not receive a reward. Only then can the committee ensure that the incentives that it doles out are not wasted.

I am also unsure why Brian calls the anti-plagiarism norm a “tax imposed on junior scholars.” I take his point that because senior scholars have a larger oeuvre, juniors may spend more time citing seniors than seniors spend citing juniors. But it does not follow that juniors spend more time citing overall than do seniors, unless we assume that seniors have more original ideas than do juniors. Seniors will also spend time citing each other, and juniors and seniors both cite the dead, as Brian observers. Indeed, as Brian also observers, all works stand on the shoulders of a very large group of giants. So large, in fact, that the few living giants upon whom juniors may stand surely constitute a negligible part of the whole. Everyone should be doing a lot of citing. And the anti-plagiarism norm helpfully ensures that they do.

What comes across very clearly in Brian’s article is contempt for academic egotism. In my favorite passage, he writes:

I will be blunt. Scholarship is rarely–if ever–original. At best, it is occasionally pithy enough to be quotable, or thoughtful enough to be worth a citation. Even on those rare occasions when a scholarly work actually introduces a novel idea, scholars do not and should not own those ideas, not even to the limited extent of a right to compel attribution. We should be humble. Scholarship is the gift we provide to each other and the public. More often than not, it is a gift better loved by the giver than the recipient. Attribution is also a gift. We should accept it graciously and thankfully when provided. But we should never demand it, or expect others to demand it on our behalf. After all, good scholars copy, but great scholars steal.

Fair enough. And I tend to agree with Brian’s argument elsewhere in the paper that the anti-plagiarism norm is vague in ways that sometimes lead to gross injustice for well-meaning authors. Oliver Sacks’s essays, The Fallibility of Memory and The Creative Self, speak powerfully to the way copying can often not only be unintentional, but an essential part of the creative process, which goes as well to Brian’s point that “great scholars steal.” Sacks writes:

Webster’s defines “plagiarize” as “to steal and pass off as one’s own the ideas or words of another; use . . . without crediting the source . . . to commit literary theft; present as new and original an idea or product derived from an existing source.” There is a considerable overlap between this definition and that of cryptomnesia, and the essential difference is this: plagiarism, as commonly understood and reprobated, is conscious and intentional, whereas cryptomnesia is neither. Perhaps the term “cryptomnesia” needs to be better known, for though one may speak of “unconscious plagiarism,” the very word “plagiarism” is so morally charged, so suggestive of crime and deceit, that it retains a sting even if it is unconscious.”

Oliver Sacks, The Fallibility of Memory, in The River of Consciousness 101, 108-09 (2017).

And:

What is at issue is not the fact of “borrowing” or “imitating,” of being “derivative,” being “influenced,” but what one does with what is borrowed or imitated or derived; how deeply one assimilates it, takes it into oneself, compounds it with one’s own experiences and thoughts and feelings, places it in relation to oneself, and expresses it in a new way, one’s own.

Oliver Sacks, The Creative Self, in The River of Consciousness 129, 142 (2017).

Sacks goes on to reproduce a speech given by Mark Twain at the 70th birthday of Oliver Wendell Homes, father of the Supreme Court Justice, and a well-known physician and poet in his day.

Twain said:

Oliver Wendell Holmes [was] the first great literary man I ever stole any thing from–and that is how I came to write to him and he to me. When my first book was new, a friend of mine said to me, “The dedication is very neat.” Yes, I said, I though it was. My friend said, “I always admired it, even before I saw it in The Innocents Abroad.”

I naturally said, “What do you mean” Where did you ever see it before?”

“Well, I saw it first some years ago as Doctor Holmes’s dedication to his Songs in Many Keys.”

Of course, my first impulse was to pare this man’s remains for burial, but upon reflection I said I would reprieve him for a moment or two and give him a chance to prove his assertion if he could: We stepped into a book-store, and he did prove it. I had really stolen that dedication, almost word for word . . . .

Well, of course, I wrote to Doctor Holmes and told him I hadn’t meant to steal, and he wrote back and said in the kindest way that it was all right and no harm done; and added that he believed we all unconsciously worked over ideas gathered in reading and hearing, imagining that they were original with ourselves.

He stated a truth, and did it in such a pleasant way . . . that I was rather glad I had committed the crime, for the sake of the letter. I afterwards called on him and told him to make perfectly free with any ideas of mine that struck him as being good protoplasm for poetry. He could see by that that there wasn’t anything mean about me; so we got along right from the start.

Oliver Sacks, The Fallibility of Memory, in The River of Consciousness 101, 111-112 (2017).

Moral censure is useful against the intentional plagiarist. But I suspect that in many, many cases, intent is lacking, and what is required is only a good-natured acknowledgement that the author either didn’t read enough before putting pen to paper, or read too much, combined with ex post attribution, to keep the incentives system properly triaged. Brian is right to call out the intemperance and “mob rule” that characterize many plagiarism events.

One hopes, in fact, that technology will make the anti-plagiarism norm obsolete before too long. One can imagine an AI-super-charged version of Turnitin that provides scholars–and in particular promotion and hiring committees–with accurate measures of a scholar’s influence without anyone needing to cite the scholar’s work. The program would comb through the sum total of human intellectual output, identify unique ideas, and trace their influence. We wouldn’t need to acknowledge each other’s work anymore; the computer would keep track of that.

Whether that comes to be or not, I can’t help wondering whether the solution to the problem of big egos that vexes Brian isn’t to have more academic policing, not less. If the system is promoting and rewarding people who don’t deserve their egos because they don’t do original work, that can only be because those people are not doing a good job of attribution themselves, and the system is failing to call them out for it. The problem may not be that they are recycling others’ work, but that they are simply failing to make themselves fully aware of what has come before. The solution is to strengthen the plagiarism-related norm that quality scholarship must reflect deep research.

Not long ago, I had the privilege of chatting with an eminent historian. What struck me was the importance that he placed on reading, and reading deeply, in his chosen subjects. Of course, as a historian, he meant reading not just in secondary sources, but primary sources as well. “How can you write a book about X,” he seemed to say, “if you haven’t dug into the private, unpublished, papers of Y? How can you presume to know everything that’s been thought about this subject before you have done that?” Legal scholars can’t always go that far, but my sense is that often they could go much further than they do.

Legal scholars don’t, because the academic police aren’t on the beat.

But they should be.