Yelp, Antitrust, and Google

Google, Amazon, and Facebook are modern-day railroads. The technology companies are three of the few organizations that own and control our modern infrastructure.

Connor Dougherty published a nice look at how Google’s monopolist position impacts the businesses that rely on the infrastructure it owns. Like farmers and railroads before, web service providers like Yelp are effectively dependent on Google’s network and at the mercy of Mountain View. As the recent EU ruling confirmed, Google engaged in anti-competitive behavior that stifles innovation, destroys Yelp, and rewards itself.

Antitrust may seem somewhat obtuse and unimportant, but it may just be the number one issue of our time. It’s one thing to see a distant company like Yelp, who has been accused of similar thuggish behavior, struggle. It’s another to imagine what will happen when Amazon begins openly discriminating against local grocery suppliers to benefit their private label brand.

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Why did FDR drop Henry Wallace from the 1944 Presidential Ticket?

In July 1944, a little over a year before the end of WW2, President Franklin Delano Roosevelt looked tired and sick. Publicly, he was taking month-long rests under the guise of war planning. Privately, he was diagnosed with severe hypertension, heart disease, cardiac failure and acute bronchitis.

The stress of leading a nation at war, rehabilitating a depressed economy and a two pack a day cigarette habit had turned his heart into a time bomb. It wasn’t a question of “if”, but “when” FDR would succumb to a major stroke. Most insiders knew in the upcoming election, a Democratic vote for President was really a vote for the Vice President. It was under these conditions that FDR made a decision that transformed the next fifty years of American history. He removed Vice President Henry Wallace from the Presidential ticket.

Prior to the rise of Bernie Sanders, Henry Wallace was the last true Progressive leader to wield national power. A scientist farmer, and capable administrator, Wallace revolutionized American farming as the Secretary of Agriculture. He spearheaded the New Deal’s most revolutionary and innovative programs, fought concentrations of power, and transformed the Federal Government into a leading incubator of scientific research. He spoke openly about the need to end racial segregation, the benefits of international cooperation, and the importance of economic development. When Norman Borlaug won the Nobel Peace Prize for developing disease-resistant wheat–it’s estimated that the hybrid grain saved over 1 billion lives—he credited Wallace as his inspiration. He was also popular. At the time of FDR’s decision, a Gallop poll showed Wallace was overwhelming backed by Democratic voters. “Nationwide,” wrote biographers, John Culver and John Hyde, “Wallace’s support equaled the next three (Vice-Presidential) candidates’ combined.” The man who ultimately replaced him, Harry Truman, a generic Democratic Party loyalist, earned 2 percent.

The question is, why? Why did FDR drop Henry Wallace from the 1944 Presidential ticket? Why did FDR want Henry Wallace, the consummate New Dealer, with vast popularity, and support among key voting-blocs removed? It’s one of the greatest “what-ifs” in American history. Critics argue that Wallace’s sympathetic view towards the Soviet Union would have weakened American interests. Supporters argue he would have ended the Cold War before it started. I don’t think there will ever be a clear answer to this question, but I wanted to illuminate 8 key drivers.

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Classic Read: How Democrats Killed Their Populist Soul

Matt Stoller’s How Democrats Killed Their Populist Soul is the best political analysis I’ve read all year. It offers a solid argument to how economic populism fell out of the national narrative—and accelerated the decline of the American middle class.

It’s hard to believe today, but seventy years ago Bernie Sander’s ideas were fairly common on the left. Stoller traces how they became rare. He examines the forces that moved the Democratic party from one in fierce opposition to monopoly power to one that embraced it. I really do hope Stoller has a larger thesis in mind, because I’d love to read a book on it.

I’d recommend reading the entire piece. However, I wrote up some highlights for the lazy below.

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Competition creates innovation: Creative Destruction & America’s problem

In the early 1940s, Joseph Schumpeter, a Harvard economics professor, was researching business innovation. At this time, innovation wasn’t really something that was studied, it was just something that occurred. Outside of Bell Labs, no organization seemed interested in investigating how great ideas came to be, and how they were scaled to society. Schumpeter was one of the first academics to take up the issue. He focused his thoughts on one of the major veins of American industry—railroads. In his lifetime railroads went from a novel invention to a technology that disrupted every facet of the American economy. But his primary interest wasn’t how the railroad connected New York with Los Angeles. It was how it burned a previous economic system to the ground and rebuilt a new—more efficient one—in its ashes. Schumpeter’s key discovery was essentially that competition creates innovation.

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Book Review: Dawn of Innovation by Charles Morris

In Dawn of Innovation Charles Morris argues that America’s economic dominance wasn’t driven by science, technology or ingenuity, but our commitment to mass production (scale). “The dominating American characteristic across all major industries,” he writes, “was the push for scale—adapting the production methods, the use of machinery, and the distribution to suit the product.” Viewing the world through this lenses reveals two myths; applying it to modern times illuminates the biggest issue facing modern governments—How to scale innovation in a knowledge economy.

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The perils of privatizing public goods

In September 1987, nearly a year before Tracy Chapman sang about revolution, President Ronald Reagan started one in American policy—he started privatizing America’s public goods. The revolution didn’t happen overnight. In fact, most people didn’t even realize it occurred. As these two fantastic articles reveal, nearly thirty years later we’re dealing with the damaging consequences—economically, ethically, and mortally. Privatizing public goods can threaten nearly every aspect of our society.

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Autonomous Taxibots: Who owns the future?

Fast Company recently published an article on the need for public ownership of an autonomous taxi utility. The article makes a case for why cities must own both the network and physical cars of the service. It is definitely worth checking out.

But what “ownership” of a taxibot network actually means is potentially confusing. That’s because a taxibot network will consist of at least three core components: 1) the taxibot fleets; 2) a physical infrastructure that allows the taxibots to communicate with the city, like an elaborate network of Wi-Fi routers; and 3) a set of operating systems and protocols that allows the taxibots to communicate with each other, as well as with other cars on the road.

It makes sense that a city would own both the physical infrastructure and the operating system that allow it to operate. Centralized public ownership would allow both an equitable and standardized system to develop. The standardization would lead to the acceleration of an economy of scale and the cost savings associated with that. I tend to believe that the ownership of taxibot fleets should be left to the market—imagine luxury and budget providers.

Another big issue, and I think the central selling point of a publically owned network: Who owns the data?

Every taxibot will be a node on a network, producing all sorts of data. This data will be valuable for the same reasons that any kind of consumer data is valuable: It can be used to improve products and services (which is a good thing) and market things to people that they may not need (which is a bad thing).

All in all this is a great article. It also begs the question, given the inevitable rise of an autonomous taxi service, why are are smaller cities without existing infrastructure (Milwaukee) still considering investing in costly light rail? Shouldn’t we be looking towards the future?

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Mercantilism: Donald Trump’s Economic Policy

Human dried apricot Donald Trump was born on third and thinks he invented baseball. His followers feel forgotten in modern America. But hidden behind his insane belief that a wall will stop migration and America should ban ¼ of the world’s population are some “interesting” economic policy ideas. Donald Trump’s economic policy is interesting because it’s rooted in ideas from the 1600s that have largely been forgotten or excluded from mainstream economics.
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How do you rebuild America? Stop treating government like a start up.

It’s news to no one that America’s middle class has been devastated by computers and globalization. With income inequality on everyone’s mind, it’s now the billion-dollar question policy makers face over the next twenty years. The standard solution follows something like this: The entire economy seems to be stagnant, except for Silicon Valley. Government needs to copy that and become more like a start up. People gravitate to this because it makes sense on a superficial level.

But society has different goals than a 5 person team fresh out of Y-Combinator.

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At what cost was China’s development miracle?

In the span of forty years the China performed a development miracle. It transformed itself from an agrarian afterthought to the world’s second largest economy. This was in spite of pervasive attitudes and policies that ran contrary to most Western economic thought. In as recent as 1980, the country’s official dictionary defined “individualism” as “the heart of the Bourgeois worldview, behavior that benefits oneself at the expense of others.” Analyzing how one person’s world went from rural farming to internet millions is a hard task. Distilling the thoughts and attitudes of a billion people and putting it in context of modern society is a seemingly impossible one. As I explain in my Age of Ambition review, Evan Osnos delivers the impossible. He answers the question, “At what cost was China’s development miracle?”

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