The Internet, Competition, and Censorship—Posner’s Comment

I agree with Becker that the Internet has been on the whole a valuable innovation. It is a less costly form of communication than either telephone or mail, and (a related point) a better substitute for personal communication than either telephone or mail; it economizes on time by reducing the transportation involved in meetings. I commute to work less frequently nowadays because I can work efficiently at home; and academics in different universities or even different countries can collaborate in writing books and articles at far lower cost than if they had to rely on the older modes of interaction. The Internet also, as Becker emphasizes, reduces the cost of access to information (though not always accurate information); it thus reduces information costs as well as communication costs.

 

As with most new technologies, however, there are downsides as well as upsides. The effect on substitute services as such should not be cause for concern except to the producers, for substitution effects are the inevitable consequence of innovation. The hotel and travel industries are hurt if business travel falls because of the substitution of online for in-person conferencing, though the hurt is offset to the extent that by lowering the costs of communication the Internet increases the amount of business activity and the geographical scope of firms.

 

But other harms caused by the Internet warrant social concern. The Internet lowers the cost of communication and there are bad as well as good communications: bad in the sense that they promote activities that reduce overall welfare. Examples are the use of the Internet by terrorists, by advocates of hate crimes, by purveyors of child pornography, by plagiarists, by defrauders, by violators of copyright law, and by identity thieves. The increase in these pathologies as a result of the Internet is a social cost and may be considerable. The contribution that the Internet has made to the recruitment and coordination of terrorists has created a considerable threat to our national security.

 

Of course, it is possible to monitor Internet communications, and our security and law enforcement agencies do that. But the volume is overwhelming; coded communications provide a challenge to monitors; and privacy advocates insist on limitations on monitoring.

 

The Internet is also highly vulnerable to penetration and disruption by enemies of the United States.

 

China and other authoritarian countries censor the Internet to prevent their populations from obtaining access to information critical of government. I agree with Becker that we should not make efforts to prevent China from censoring the Internet. I don’t think we should interfere in the internal affairs of countries that are not enemies of the United States. I also don’t think that Chinese censorship will be effective in the long run; it is too easy to circumvent Internet censorship.

 

The negative impact of the Internet on the newspaper industry is a possible source of concern. Newspapers are a bundled product: the publisher provides a large variety of news, opinion, and advertising in an effort to obtain a large enough readership to offset the heavy fixed costs of producing information. The Internet enables unbundling at low cost, which makes it difficult to cover those heavy fixed costs. As classified advertising migrates from newspapers to inexpensive Internet services, for example, the revenues of such advertisng no longer support costly newspaper newsrooms. But the effect on the extent to which the public is well informed may be offset by the rise of the blogs, which provide immense quantities of information and opinion on public issues at zero cost (other than time cost) to readers. At the same time, however, because the blogs are an unfiltered medium they are also a source of a great deal of misinformation. Yet Wikipedia illustrates how prompt correction, which the Internet also facilitates, can reduce inaccuracies in online dissemination of information.

 

The time costs imposed by the Internet are a source of some concern. People receive a great many more communications, because of their lower cost, in the form of email than they did in letters and phone calls, because email is cheaper. This can be a burden, and it is only partially offset by the “junk mail” filter programs that email services provide. The sender of a communication will usually not consider the cost to the recipient. Information overload can be a real cost.

 

Finally, we have become aware recently than the use of the Internet by drivers is a significant source of automobile accidents.

 

The net effect of the Internet on social welfare has probably been positive, but it is difficult to say how great it has been. Communication and information flows were rapid before the Internet, and the effect of increased rapidity on economic output and personal satisfaction may not be great when the full costs of the Internet are taken into account.

 

Comments

[Dominik Stroukal]

Mr. Posner, you greatly pointed to absurdity of "social welfare" concept or Keynesian aggregation. How you can even think about making sum of e-mail communication with my mother and terrorism? Plus 130 minus 1700? Plus a little minus a lot?

Anyway, great post. You just realized that internet is (probably!) a good thing, but some have lost their jobs ...and that bad people exist. Great.

[C. P. Pons]

Living in China, I think that this incident shows the complexity and shortsightedness of the Chinese Administration. Though probably Google will not leave China, the world largest Internet user community, it cannot risk its main asset: its credibility and reliability. Had it left China, its decission would make economic sense.
Chinese regulators, or at least some of them, often do not realize the long term impact of their decissions (not even thinking of doing a welfare analysis). Probably, pushed by its domestic competitors (Google market share has grown quickly in the last years), Google has suffered tooo much from various kind of interventions. Such a great ammount of intervention is probably one of the reasons why China still lacks leading companies in high tech sectors. The story can be applied to many industries, but it is much more evident in Internet and information.

[jbay]

Not to mention the online peer-reviewed journal which allows a person, lets say reading the economist, to read the actual scientific publication in a few short seconds instead of taking the authors word for it. I'd say the online peer-reviewed journal doesn't get enough coverage.

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[Brian Davis, Austin, TX]

jbay, I'd urge you to read a sampling of Judge Posner's court opinions over the past 8-10 years. He's all over those peer-reviewed journals, print and online, in every field the law touches. Chief Judge Alex Kozinski of the Ninth Circuit out on the west coast reads and cites a boatload of online material, too. Other courts and jurists are coming along, but you can't always be sure whether the opinion's author or a law clerk inserted the citation.

[SKT]

Dr. Posner,

The most important productivity innovation of the 20th century was the advent of the computer. An organic chemist can do in 45 minutes what before would have taken weeks, and pharmaceuticals can use computers to control robotic assay machines, testing millions of potential drugs simultaneously. I assume you agree with me.

You should realize, then, that much of the power of computers comes from collaboration. By connecting computers into a "cloud" we can do what before was not possible. We can transmit large amounts of data nearly instantaneously, allowing, for example, road traffic controllers the world over to have accurate information of the world's airplanes. Similar data networks, from those that control credit card transactions to those that allow for video messaging, are only possible with the internet.* You can find your high school classmates, from over 50 years ago, with little trouble. Radiologists and pathologists in the United States can read x-rays and slides from rural Indian villages that don't have access to medical specialists but do have access to picture messaging.

Be mindful that the internet you experience is not necessarily representative of the full effect of the internet, or even the internet experience of the young. With basic computer savvy (rarer among older computer users but standard among the youth), for example, you can minimize the risk of identity theft. It's also unlikely that the parts of the internet you experience are representative of the most powerful innovative functions of the internet. Recall the analysis given prior about networking computers together to increase the usefulness of computers.

*You took the liberty of conceiving of the internet broadly as large networks of computers (recall how you refer to text messaging as the "internet"), so that is the definition I apply. Some of these systems are not strictly "internet" systems, but are in essence identical to the internet.

[N.E.H.]

So the old blog was eliminated by either a counter-intelligence or malicious actions by nations, organizations or persons unknown. Kind of reminds me of the old smashing of printing presses, harassment or outright murder of writers & intellectuals by nations, organizations or persons unknown for given political, economic or intellectual reasons. Speech acts as Sacrosanct? Everyone should be made familiar with "The making of Public Opinion" and Goebbels "Rules of Propaganda".

As for the Internet, there appear to be three problems that must be overcome for it to be come a valuable & viable communications tool. Those three issues are:

1. Security
2. Credibility/Accuracy
3. Timeliness

Otherwise, it's going to end up like television where the most credible things on are the Soaps, bad sit-coms and moronic talk shows. Wait a minute, the Internet may already be there... Welcome to the "Internet Wasteland".

[abercrombie and fitch]

"bad in the sense that they promote activities that reduce overall welfare. Examples are the use of the Internet by terrorists, by advocates of hate crimes, by purveyors of child pornography, by plagiarists, by defrauders, by violators of copyright law, and by identity thieves."

every coin has two sides, isn't it?

[Willi Yuan]

Profesor
I'm a Chinese student who is studying antitrust law in Germangy. I could not more agree with your opinion that "google" is very important for people's life. But there is a little different between American and Chinese. Because google as a American company met big problems last years when it try to supply internet searching service in Chinese. Google had not understood Chineses words and characters very well. So in China most people use "baidu" (www.baidu.com) to search for information. We could get the most information in Chinese through baidu more quickly and exactly.

So the market share of google in China was years lang low and behind baidu with a huge distance. They could not earn enough money to make a subsidiary(google.cn) besed in China profitable. That's exactly the first reason for the quit of google.cn.

I don't know if you would think that your old website was attacked by Chinese hacker or government. But I could hard to believe they would do it.

I have to admit that censorship exists in China. But it's not so extremely as American think. The gmail accounts were attacked by hackers only because they used this to plan terroristic attack in China. The American government, or any other government will do and are doing the same thing.

Actually I won't try to persuade you to believe that many information you get from the medias in your country are insufficient and unilateral. But I think it's not a bad idea to supply you and other people the other side of news.

Please forgive me for being frank.

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