In his posthumously published Power and Prosperity, Mancur Olson tells a story of China in the 1920s, when the warlord Feng Yu-hsiang defeated “a notorious roving bandit called White Wolf”. Most people in Feng’s domain preferred life permanently under the thumb of a warlord to life prone to the periodic invasion of roving bandits, and Olson wondered why? His answer was that even a warlord who wants to extract as much tax from his citizens as possible must look to the future, and unlike a roving bandit that future depends on having a relatively productive population. There is an alignment of interests between the population and the warlord that does not exist between the population and the bandits: it is in the interest of the warlord to restrain his takings and so ensure that his victims have a motive to be productive. The warlord also has a motive to clamp down on crime (other than his own), and to provide public goods that benefit those he taxes. Olson describes this as a “second invisible hand”, by which autocrats are guided “to use their power, at least to some degree, in accord with the social interest.” In a similar way, in a neighbourhood under the control of organized crime there will be no robberies, only a protection racket.
In many ways the Internet is, of course, a place. There is even a word, netizen, to describe us in our role as citizens of the Internet. And if the Internet is going to be a reasonable place to spend our time someone has to provide those common goods that keep it so – security, community standards, and so on. Who will do so?
Google is a warlord of the Internet, surrounded by bandits. It provides public goods because its revenue (advertisements) depends on a safe and yet wide-open Internet. For Google to make money the Internet must be accessible from Google’s search engine: enclosures are a threat to its business, whether they be ad-funded like Facebook or subscription-funded like the Wall Street Journal. Netizens must be comfortable and safe from bandits as they go about their daily electronic lives. Google also clamps down on attempts by companies other than itself to generate revenue from the Internet, for example by pushing the limits of copyright in its book-copying efforts, or by pushing open source software at the client side of applications.
While autocrats provide some public goods, there is a limit and in Google’s case we see that limit in privacy and to some extent in copyright. When CEO Eric Schmidt says (30 second video) “if you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place”, we have bumped up against that limit. And while we may be grateful to Google for keeping us free from the claims of copyright owners, attempts to restrict advertising on and around content will not find a friend in Google.
Take a look!