In 1833 the Victorian economist William Forster Lloyd published Two Lectures on the Checks to Population, which introduced an idea we later understood as the Tragedy of the Commons. The example used was of a common grazing area and how the interests of the people using this “free” public land would inevitably work at odds with one another in maintaining the public land. Everyone had an incentive to take as much as they could, as quickly as they could, but no one had an incentive to put back.
Today this is best understood in the management of fisheries. You can’t own parcels of the ocean and even if you can assign areas to particular fishermen, the fish don’t pay attention to these boundaries. The fisherman has no incentive to limit his cod harvest because the fish he does not catch will simply swim over to the next guy, who will catch them. In order to maintain the fishery, the state comes in and puts limits on the overall catch and what each fisherman can catch each season.
This fairly well known example is used by certain ideologues to demand socialization of all private property. Environmentalists will claim that the three-toed elephant slug is a common resource so it must be protected by the state. Therefore, anything that impacts the slug, requires permission from the state. That means if you want to mow your lawn or put up a tool shed, you have to file an environmental impact study and spend a bazillion dollars bribing environmental groups. It’s why we can’t build anything of consequence anymore.
Even though the idea has been abused, it is a useful concept when thinking about something like this story in Breitbart. Musicians are quickly seeing their revenue from music sales disappear. Newspapers all over America are near collapse because their content is distributed free on-line. Those that try to charge a fee just see the news given away by someone else, so their efforts to create property lines on-line always fail. Even the pornography industry is being gutted by a flood of free porn.
Now, the music industry has adapted to the fact Google is essentially an open air contraband market. Big shot musicians have teams of lawyers to police this stuff. The small musicians make their money from live shows and selling their music at their events. But, others don’t have this avenue. Photographers, graphic artists and writers just accept that they no longer have property rights to their work. I often see my work posted on other sites and no one from those sites asks my permission. I always give it when asked, but few bother asking.
The big internet operators and their government ignore all of this because they have grown stupendously rich off this racket. Google is essentially operating an open air contraband market with YouTube. Try running a heroin market on your property and see what happens. But, you’re not a billionaire and you can’t afford to buy a government of your own so the rules apply to you. Even banks find they have to report large movements of cash in order to help the government catch drug dealers. Ross Ulbricht is doing life in prison for being the Google of illicit drugs.
When the robot historians look back at the collapse of the West, they may point to the Internet as an institution analogous to slavery in the Roman Republic. Some argue that the flood of slaves in Rome after the victories over Corinth and Carthage altered the economic balance of Roman society. Large farmers could afford to buy up lots of slaves, thus collapsing the market for labor. This also allowed them to crush their smaller competition. The result was the rise of a landed oligarchy at the expense of the small land owners.
The Internet has brought back something that we thought was dead and that is rentier capitalism. This is the economic practice of monopolizing access to any kind of property, and gaining significant amounts of profit without contribution to society. Cable operators are a good example. In my youth, TV was free. It made it’s money from commercials. Today, you pay the monopolist a fee to get access to TV shows, that still run ads. In fact, they run even more ads than when I was a kid. In the case of kid’s shows, the programs are just ads to sell toys.
The other institution is cost shifting. The paint company that dumps its old paint into the river because it is a cheap way to get rid of the waste is shifting some of its costs to the public. Passing laws to prevent it or taxes on the paint maker to pay for the cleanup, is an effort to end the practice of cost shifting. Even today, the smallest mechanical shop complies with environmental rules because the punishments are draconian. These costs show up in the invoice to the customer. When I get my oil changed, I see an entry for oil disposal on the invoice.
The modern Internet giants shift huge chunks of their business cost to the public via all sorts of schemes. The most obvious being the internet providers. In most of the country, technology and/or the law prevents the internet provider from implementing metered service. Everyone pays the same for their internet regardless of usage. That means the guy with three teenagers that spend all day watching YouTube pays the same as the local feminist, who only goes on-line to post pictures of her cats to Facebook.
If the guy with the three kids had to pay for his usage, his bill would be five times that of the local feminist. He would also sharply limit his usage. Google and the other video providers would see their customer base shrink to the point where it may no longer make sense to exist in some cases. My first broadband bill was $12.95 per month. The cheapest in my area is now $69.95 plus a long list of fees and taxes. The service is marginally better, but not five times better. The additional cost is about me subsidizing my neighbors for the profit of the Internet companies.
Similarly, if the suppliers were charged for use of the public roadways, like we tax motorists and trucking companies, they would have to charge vastly more for their product. Instead, those costs end up in your tax bill, because, the government gives tax breaks to the internet providers. If Facebook had to build out a network to supply you their product, the cost would be prohibitive. Instead those costs end up in your cable bill, even if you have no use for Facebook. The internet economy is all about socializing the costs and privatizing the profits.
I’m going long here so let me wrap it up by summarizing a bit. We have created this virtual commons, but we have not come up with a way to manage it like a park or fishery. Further, we have permitted the development of rentiers, who skim from the public good, but contribute very little to it. Worse yet, we have massive cost shifting with the profits going to expand and perpetuate a system that works against the interests of the people. When a firm that made its money from cat videos can dictate terms to the US government, we’re well past the tragedy of the commons and into techno-feudalism.