Welcome to the Government-IT Infrastructure Complex

Whenever something really bad happens, we tend to rush to do something quick and fast which makes us feel better, but throws out important principles and thus has severe negative longterm consequences. The Patriot Act post 9/11 comes to mind. We just had a failed coup, the risk of which one could see coming from a mile away (actually going as far back as Trump’s election). But now that it has taken place, however weirdly farcical, everyone seems to finally wake up and so urgent action is required. Banning Parler from the app stores and cloud service providers feels good. And legal. Companies just choosing not to do business with someone who helped facilitate a coup, clearly a Terms of Service violation. How could this possibly be a bad thing?

The starting point for thinking about this should be the recognition that one of the biggest accomplishments of modern democracies is that the rule of law is administered by a government accountable to the people, with a balancing of powers between the executive, legislate and judicial branches. Unaccountable power, such as vigilantes, mobs, warlords, etc. are the hallmarks of poorly functioning countries and tend to suppress both freedom and economic activity. Who else might be unaccountable? Corporations that have lots of market power.

Over the last decades we have allowed many markets to become highly concentrated (see this excellent book by the economist Thomas Philippon). But nowhere is this effect stronger than online. Google, Apple, Amazon, Facebook, Twitter have (Read more...)