I’m working on a project looking at libertarian views on copyright (more on that soon), and I’d like to solicit your feedback on an analogy I’m developing. I’ve set up a comment thread at Google+ and I’d sincerely appreciate your thoughts on this post. Email feedback is also appreciated. Here goes…
Libertarians, conservatives and other supporters of a free market tend to be critical of government programs that subsidize particular industries. For example, the loan guarantees that allowed Solyndra to set up shop. We don’t like them because they distort the market and tend to lead to rent-seeking, if not corruption.
Why do we have loan guarantees for renewable energy projects like Solyndra’s solar power technology? Quite simply it’s because we’d like to see more renewable energy technology developed; more than is profitable to develop right now. So, the government offers a subsidy to incentivize the creation of such technology, which will eventually benefit the public at large. So far so good, but there are problems with this kind of government privilege.
First, there is a knowledge problem. How do we know that we’re not already getting the right amount of investment in renewable technologies? Without a government subsidy, there would still be investment in renewable energy technologies. We just think it’s not enough. But even putting aside how we can know that, the other question is, how much investment is optimal? Without a market process to guide investment, we don’t know how much is enough. So when the government offers subsidies, it’s guessing. It’s likely offering too little or too much, with each error introducing its own inefficiencies.
Good insight into what makes Tumblr tick. This is spot on:
In the beginning, most traffic came to Tumblr from without; but now more than 70 percent of the traffic on Tumblr occurs in the dashboard zone, where users read, react to and repurpose one another’s posts. The upshot is “the mullet theory of social software design,” summarizes Chris Muscarella, a tech-entrepreneur friend of Karp’s. “It’s all business in the front: you have your blog that looks like any other blog, although usually prettier. And then the real party is in the back, through the social interaction on the dashboard.”
I don’t think they’ll have trouble monetizing the dashboard without pissing anyone off. In addition to figuring out how to make money, though, they need to also focus on developer relations. This tale of woe is the latest in a long line, and they know it. I’ve been begging for a long time for an answer to whether we can post to the queue from the API. Help us help you.
But a curious thing happened almost immediately. They began by trying to replicate some classic experiments – such as the jam study, and a similar one with luxury chocolates. They couldn’t find any sign of the “choice is bad” effect.
Will be awkward for new editions of several best selling books.