I’m going to close out my series of essays about Tim Wu’s new book, The Master Switch: The Rise and Fall of Information Empires, by discussing his proposed solutions. In the first five essays in the series, [1, 2, 3, 4, 5] I’ve critiqued Wu’s look at information history as well as his use of terms like “market failure,” “laissez-faire” and “open” vs. “closed.” I argued there’s a great deal of over-simplification, even outright distortion, in his use of those terms throughout the book.
Anyway, let’s run through the basics of the book once more before getting to Wu’s proposed solutions. By my reading of The Master Switch, Wu’s argument essentially goes something like this:
- Information industries go through cycles. After a period of “openness” and competition, they tend to drift toward “closed,” corporate-controlled, anti-consumer models and outcomes.
- The resulting “monopolists” then block much innovation, competition, and free speech.
- Consequently, “the purely economic laissez-faire approach… is no longer feasible.”
- Moreover, information industries are more important than all others (“information industries… can never be properly understood as ‘normal’ industries”) and even traditional forms of regulation, including antitrust, “are clearly inadequate for the regulation of information industries.” (p. 303).
- Thus, special rules should apply to information-related sectors of our economy.
Again, I’ve challenged some of these assertions in my previous essays, specifically, Wu’s incomplete history of cycles and the fact that he greatly underplays the role of governments in “locking-in” sub-optimal market structures or, worse yet, creating those structures through misguided public policies or regulatory capture. Wu discusses some of those factors in his book, but he tends to regard them as secondary to the inquiry, whereas I believe they are crucial to understanding how most “closed” or anti-competitive scenarios develop or endure. Instead, Wu simplistically suggests that “the purely economic laissez-faire approach… is no longer feasible,” even though no such state of affairs has ever existed within communications or media industries. They have been subjected to varying levels of indirect influence or direct control almost since their inception.
Regardless, what does Tim Wu want done about the problems he has (mis-)diagnosed? Continue reading →
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