Note: This is the fifth of seven blog posts reviewing Tyler Cowen’s book “Big Business: A Love Letter to an American Anti-Hero.”
Thus far, I have reviewed the first four chapters, as well as the appendix, of Tyler Cowen’s “Love Letter to Big Business.” (Check out my blog posts of June 6 and June 7.) Next, let’s turn to Chapters 5 and 6 of Professor Cowen’s beautiful love letter.
At first glance, these two chapters do not appear to be related. Chapter 5 (“How monopolistic is American big business?”) is devoted to a wide variety of industries, everything from clothing to health care, commercial aviation to cable TV, etc., etc., while Chapter 6 (“Are the big tech companies evil?”) drills down on the tech industry, big data, and Silicon Valley. So, why am I lumping these two chapters together? Because Cowen himself applies the same antitrust framework to all these different industries, and here, Cowen gets it right: the claim that big business firms are dangerous monopolies is greatly exaggerated.
So, why is Cowen right to downplay these monopoly concerns? For two reasons. First off, as Cowen correctly notes (p. 84), consumers have significantly greater choice than in the past in most sectors of the economy, but secondly (and, I would argue, more importantly), in those few areas where we do see monopoly firms (like cable TV) or anti-competitive prices (like health care and aviation), those monopolistic practices are, ironically, the result of government licenses or excessive government regulations, which make it more costly or impossible for new firms to enter those particular markets. (To his credit, Cowen provides many examples of how government is to blame for most of our economic woes.)
What about Big Tech, especially companies like Amazon, Apple, Facebook, Google, and Microsoft? Once again, Professor Cowen is spot on: with the possible exception of Microsoft, which has historically overcharged for its lame products and tried to stifle innovation in the Internet browser market, almost all the products and services that the Big Tech firms have unleashed upon the world have improved our lives at many different margins. Even Facebook and Twitter, with their loathsome and tone-deaf CEOs, selective censorship policies, and weak privacy protections, are worthy of our praise, or in the words of Professor Cowen (p. 100):
“I would like to speak up for the tech companies, especially the big ones. They have brought human beings into closer contact with each other than ever before … mostly through social media. They also have placed so much of the world’s information at our fingertips, and more often than not it is accessible within minutes or even seconds. Whatever problems these developments may have brought in their wake, they are unparalleled achievements and arguably the greatest advances of the contemporary world.”
What about privacy, you might ask? Even Professor Cowen is worried about “the enduring loss of privacy” (p. 121), especially the development of sophisticated facial recognition technologies, detailed genetic profiles, and the ever-present risk of black hat hackers, calling out these particular privacy issues as the elephant in the room. The irony, however, is that the best way to fix or address these legitimate privacy concerns is with more technology, not less. Think of spam filters, encryption, and anti-facial-recognition strategies, just to name a few examples.
In any case, I have always wondered whether privacy is overrated. As Cowen himself notes, no one is immune from negative gossip, and privacy (like liberty) must always give way to public safety. Also, how can we have a meaningful discussion about privacy if no one has even bothered to define this amorphous concept? Alas, a comprehensive analysis of privacy is beyond the scope of this blog post, but a good place to start is Richard A. Posner’s classic essay on the economics of privacy, available here.
We will proceed to Chapters 7 & 8 of Cowen’s Love Letter to Big Business in my next blog post …