Internet hopes, disappointed

1. The death of distance. Supposedly, the Internet was going to reduce the importance of location. Instead, the economic importance of a few key cities seems to have increased.

2. Many of us foresaw the tebirth of highly decentralized markets, in which the small entrepreneur could compete on a level playing field with corporate giants. Instead, the Internet is dominated by key “platforms,” such as YouTube and Amazon, which rake in revenue. Those of us who try to use those platforms to earn our own living are more like Uber drivers than like entrepreneurs in charge of our own destinies.

3. A libertarian moment. The Internet would be a model of decentralized, unregulated human activity. Instead, we see corporations and governments discovering the ability to exert control. As I noted previously, the censorship that we thought was impossible 20 years ago is a reality today.

23 thoughts on “Internet hopes, disappointed

  1. Reading economic history is lots of small players in libertarian state is not very stable in the long run. Basically, the Jon Galts of economic society become the Taggarts after 5 – 10 years when the Jon Galts are rich. (Look at Bill Gates and I still think Mark Zuckenberg is the best Democrat for 2020 against Trump.)

    1) This one was truly unexpected but I think we focusing (shrinking) home offices only. I suspect this might change in 20 years.

    2) In terms of Youtube, Amazon and Uber (?) the platforms are the monopolies and has given more opportunity to small writers and producers. Not a perfect system today but it better system than 15 years. Jury is still out on Uber.

    3) It was a libertarian moment but lasted 5 – 10 after 1994. Also it is not government censorship so don’t assume Nazi and ISIS material will disappear as the find alternatives.

    In reality most businesses and markets have consolidated the last 20 – 30 years. I suspect the issue of tech investment is that it takes as much money as factory capital but that tech investment is either very successful or worthless. So the over-investment in Railroad tracks left lots of overpaid but useful railroad tracks but the Dotcom bubble had some big winners, Amazon, and a ton of big worthless losers.

  2. There are a few other negatives, though it’s not clear whether they are “disappointments” because many people foresaw the problems early and there wasn’t unanimous hype in the optimistic direction.

    The first issue is the permanent record Panopticon, with some loss of privacy and ability to leave mistakes or embarassing things in the past, but not quite yet a “Transparent Society” as per Brin. There were some optimistic types that thought that various technological developments may provide a partial solution for this issue, but it’s fundamentally extraordinarily difficult to interact with others publicly without leaving a huge data trail and letting many third parties own the records.

    And the second problem is the “distributed inquisition” of the social media online lynch mob. As McArdle wrote, this is now a very obvious social failure mode enabled (or at any rate amplified and accelerated by) ubiquitous internet use, and even an innocent person faces an enormous uphill battle trying to clear up their reputation after the fact. We haven’t figured out how to control this hideous power, and frankly there may be no good way to do so.

    • To you and me it’s a failure and it’s hideous. But we’re not the mob. We’re the minority.

      Henry Tilney speaks for society. That “every man is surrounded by a neighbourhood of voluntary spies” is something to boast about, when he says it.

  3. 1. The internet only facilitates the exchange of data. To that extent, if your work and your supervisory regime can fit into a limitation of “data only”, then you can work anywhere. That is the case for me. I can work anywhere. The idea that this would apply to a wide cross section of workers was probably overstated.

    2. I disagree that YouTube and Amazon predominately leaves only Uber driver like opportunities. Most business opportunities fail, and if you make such opportunities that much easier, you can expect even higher failure rates. Still, Uber drivers can’t earn millions of dollars under any circumstances, and Amazon and Youtube have facilitated thousands of small businesses that have earned such money.

    3. While there are anectdotes that some control has been exerted by gatekeepers, its also true that right now, anyone can set up a server and start doing pretty much anything they want at a moment’s notice.

    • its also true that right now, anyone can set up a server and start doing pretty much anything they want at a moment’s notice.

      That’s simply not true. “Routes around damage” Gilmore himself got booted by his ISP. Your server wont be serving anyone unless it connect to the broader network. Ot what if your ISP is ok with you, if only you could pay your bills via direct deposit, which you can’t, because no bank will service your account or process your payments or route your donations. Or what about your server being connected, but other people are using their servers to DDOS yours, and no one will let you buy defense services?

      In a way, pariahs of various kinds would be better off if the government itself owned and operated these telecommunications services, in a way analogous to the way that speech is better protected at public universities than private by operation of law.

      This is a hard problem, especially for libertarians. I have not come across any good essays from that perspective offering proposals for what could be done about it.

      • “Pariahs” could previously have owned an obscure small business or put out a newsletter. They still can.

        I don’t like the big companies acting as censors, but there’s still plenty of room for small fry. Let’s not overstate things. Even with Google, you can find tons of objectionable stuff. As censors, they’ve only purged a handful of symbolic items. When they start to get rid of all the porn you can get via Google Images, I’ll start worrying.

        I’m a bit more worried when I see things like the recent fork of node.js. Are programmers really going to be so SJW that they can’t do coding with conservatives? Sigh.

        • I’m a bit more worried when I see things like the recent fork of node.js. Are programmers really going to be so SJW that they can’t do coding with conservatives?

          Clearly enough of them are to force this result. And why not expect a lot more of this kind of thing to come?

          The fundamental problem is that abstract ideological values not subordinate to some even higher value do not contain within themselves any principle of self-limitation, moderation, or requirement for balance with other values. If equality is righteous and socially just, and the current social situation is clearly unequal thus unjust, then why stop pushing the envelope until justice is achieved? And per the fundamental social rule, that includes punishing anyone who won’t cooperate 100% of the time in supporting the orthodox narrative and pushing in the same way to the maximum extent feasible. If you are trying to achieve the impossible, and refuse to accept that it is impossible, then there is always more that could be done, and so ought to be done, and must be done. And that causes perpetual escalation and runaway to increasing persecution and insanity. It is a social failure mode, deriving from a zero-sum rat-race of chasing status via competitive sanctimony. There are many clear historical examples of this phenomenon at work.

          There is, unfortunately, no reliable, long-term bulwark to defend against this problem in an open, liberal, and increasingly centralized democratic society, though the institutional and political traditions of the English-speaking world did a lot to slow the process down, while they lasted.

          And so it’s rational to expect that things will just keep getting worse and worse until some new form of social organization and equilibrium emerges which imposes order on the situation.

        • From a cursory reading of the relevant github threads, you are overestimating this node.js fork thing. Four or five diverse flaming SJW developers (out of dozens or hundreds, difficult to count in an open project) tried to force an issue, got slapped down by the steering committee and decided to take their ball and go play in a separate sandbox. I’d rather say it’s a hopeful sign.

  4. I would keep an eye on the “death of distance” thing. Cities like Portland are already seeing huge influxes of people fleeing the Bay Area because their companies are letting them work remotely. This is partly because video conferencing and remote collaboration have gotten much better very recently. (See the company Zoom, which is starting to become standard at tech companies because it’s much better than WebEx, Google Hangouts, etc.)

    You can imagine a future where Wall Street, VC, and C-level tech executives are still based in New York and the Bay Area but lots of well-off people (engineers, middle managers, product managers) disburse to smaller hubs of economic activity and fly to those cities when they need to do high-level stuff. Just a thought.

  5. I, for one, lament the death of distance.

    “Harry”, who has a thick Indian accent, keeps calling to tell me I have a virus on my computer system. This he apparently knows, but not the model of computer I have.

    “Peter”, also with a thick Indian accent, wants to sell me furnace cleaning services. He calls about once a week.

    Another one calls to ask me if I have a security system installed. And so on.

    So my phone has become a useless piece of garbage that sits on my desk and rings non-stop. But I can’t do anything about it because, among all those calls, one might be important.

    Please bring distance back…

  6. This was never really articulated at its beginnings, but the internet also dramatically narrowed and increased the amount of human capital necessary to be competitive in the labor market. For people living in the western world this has probably been its most important disappointment.

  7. I don’t think the tendency of tech industries to evolve into monopolies or oligopolies is necessarily a problem, as long as the barriers to entry aren’t too severe. If Google got egregiously nefarious, it people could switch to Bing or some tertiary search engine without too much inconvenience or someone could start a new one without too much difficulty and get a strong customer base. For this reason, any field that primarily dependent on software is going to be fairly safe. Anyone can create an app (well, not quite, but it’s not a rare talent). Hardware may be different though, as not so many people can just build and produce a smart phone in basement. Still, there are scores of other companies that would leap at the opportunity to dislodge Apple from its market dominance the moment it slips up.

    The biggest threat to the openness of the internet is, IMO, from intellectual property and rent seeking regulations, which could raise the barriers to entry and enable tech monopolies to do whatever they want (i.e., turn them into utility providers).

  8. This paper is primarily concerned with the centralization of news dissemination rather than entrepreneurship, but some may find it interesting:

    Defending Internet Freedom through Decentralization:
    Back to the Future?

    http://dci.mit.edu/assets/papers/decentralized_web.pdf

    “…Just a few large platforms drive most traffic to online news sources in the U.S., and thus have enormous influence over what sources of information the public consumes on a daily basis…”

  9. More disappointments.

    Open Source Movement and Competition: Things are as proprietary as ever. Linux never broke through to the mass consumer market. And even USG is stuck spending a fortune on being permanently wedded to outrageously expensive products of stagnating quality and file formats from really only two companies: Microsoft and Adobe. And frankly, the fact that pdfs even exist as something Microsoft wasn’t able to head off early, and now it’s too established and so too late, seems to me more of a historical fluke than anything else. I use MS Outlook for work emails and scheduling and its lack of functionality compared even to Gmail is incredibly frustrating. And don’t get me started on Word.

    The entities that win the winner-take-all wars of conventions, formats, protocols, etc. are sitting pretty. It’s just too difficult for everyone a world in which lots of people use lots of different software and formats, and next to impossible to simultaneously coordinate to switch to some new former without some single entity being in control and able to dictate terms for everyone else.

    Economic growth seems to be increasingly dominated by these kinds of Thiel-esque Schelling-Monopolies.

    • On the other hand, audio and video codecs and container formats evolve constantly. New ones are being introduced each year, and old ones gradually fall out of use. There are many (at least on the order of 10) important participants in the market and at least half a dozen formats are in widespread usage at any moment. Popular media players number in the dozens.

    • “Linux never broke through to the mass consumer market”

      Most people are using Linux. Just not the way you thought they would.

  10. The high expectations many used to have about the Internet were unfounded because they were based on experience that, while exciting, was quite unrepresentative. The Internet, and World Wide Web, was initially built by geeks and for geeks, and one had to be at least a little geeky even to access it, much less publish content. This made for an unusually high signal-to-noise ratio. One may take the success of Geocities as the peak of this phenomenon, when the Internet had picked up about as many slightly geeky people as were interested. However, with the rise of Myspace (and more reliable Internet connections), the threshold of geekiness to publish and view content dropped precipitously. Starting with Usenet, Eternal September had crowded out geeks from indefensible platforms, generating a phenomenon quite analogous to white flight and black undertow. As the threshold for participation continued to fall, it picked up more and more of the general population, whose interests are much more diffuse and commonplace. Accordingly, the Internet quickly filled up with lolcats, selfies and pr0n (or maybe pr0n, lolcats and selfies), which is much more representative of the usage of means of communication by the general population. Consider what the median phone conversation consisted of when people still used to voice-call on landlines: is it that much different from the content of the median Facebook page or Snapchat chat? If any libertarians had expected that decentralized, unregulated human activity would look much different from a high school cafeteria food fight, they have only their own starry-eyed idealism about the human nature to blame.

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