Articles by Tim Wu

What is a Tech Libertarian?

by on November 16, 2010 · 38 comments

THE MASTER SWITCH was written to be readable and hopefully entertaining.   But its real goal is to urge readers to examine our relationship with all forms of centralized power.  There are deep contradictions between a fully centralized society and a free one; indeed I am not sure the two can co-exist.   Its message to libertarians is this:   if human freedom is truly the value that matters most, we need pay attention to the size of the institutions that govern the most important human functions.

As this suggests, while my book is designed to be relatively easy reading, at deeper levels it is a meditation on human freedom.  And while this may be unkind, I will respond to Thierer’s review to show how I think that contemporary libertarianism has begun to lose its way and betray its own creed.   Instead of a philosophy of freedom, it is at risk of becoming a theory of villanization, where every single wrong must be traced, somehow, to “government;” to say otherwise is to betray the movement.   To my mind that’s not true libertarianism in the tradition of John Stuart Mill, but just another theology of blame.

(N.B. I am grateful for Adam for inviting me to post a response.   Why we disagree in profound ways, I am flattered by his engagement with the book, and his readiness to give me space to respond).

Let’s get to the basics.  I define a libertarian as someone who is, at the deepest levels, prioritizes freedom over other values.  He is willing to forgo a preferred substantive outcome he might prefer, in exchange for a system that gives him freedom.  The classic example, of course, is the speech system: many of us might prefer that certain people to shut up forever (pick your favorite), but nonetheless still support a system of free speech.

Anyone deeply interested in freedom as a value should, by implication, be interested any non-chosen limits on that freedom, no matter what the source. Continue reading →

On the Definition of Monopoly

by on November 16, 2010 · 8 comments

Adam Thierer’s claim that I am redefining monopoly in my Wall Street Journal piece is sowing confusion and misleading the public.  Hence this corrective.

A monopoly is any firm that has a dominant share in the market for a given good or service (legal definitions range between 40% – 70%) resulting in power over that market.   That is the beginning and the end of the definition.   There is no further requirement that the firm be evil, gigantic, have caused consumer harm, be long-lasting, or anything else.

What Adam is thinking about is what a lawyer would call an “actionable” or “unlawful” monopoly; or perhaps a monopoly that violates s. 2 of the Sherman Act.   But I never said in the Wall Street Journal that the Internet monopolies are unlawful.   The point was that these are firms in the early age of monopoly, indeed in a kind of Golden Age.

To be more specific, by the economic and legal definition, in one or more markets, Google, Apple, Facebook, and eBay are pretty clearly monopolists.   Google has market power over search.   Apple, portable music players and iTunes downloads.   Facebook, social media sites.   eBay, online auctions.

Amazon and Twitter are closer cases; it all depends on market definition.  Twitter’s market may be small, but the size of the market isn’t the point.

The key is understanding — and this is where a law degree can come in handy — that monopoly by itself is not unlawful in the United States.  It is abuse of monopoly that is actionable. Continue reading →

[A guest post from Tim Wu]

Well its always fun to have two people you respect read your work and such is the case with Tim and Adam, though to be honest I probably enjoyed Tim’s analysis a little more.

Adam’s reaction is too strong, and doesn’t really get at the main points in the op-ed. The main point was this: that bandwidth has become an essential input in an economy that depends heavily on moving information. For that reason we must gain a sensitivity to the issues of supply and demand surrounding it. If anyone disagrees with that, I’d love to hear why.

I use the comparison to gas and energy because we all know that when gas prices go up or down, large parts of the economy are affected, from tourism through, say, bowling alleys. What I am saying is that bandwidth may have a similar nature: that if prices are high, it effects all of the information-related markets in interesting ways, from startup video services through google. It is still early in the age of the internet economy, so this may be less obvious at this point.

If you agree with this, you must care about industry structure and government’s role in suppressing or helping competition in that market.

Meanwhile, while the OPEC example may be a tad dramatic, harping on the fact that OPEC is comprised of nation-states, as opposed to firms, is a mistake. From an economic perspective, why do we care if it is, say, a worldwide private conspiracy setting prices as opposed to a conspiracy of nation states? The effect on prices is the same whether its four firms setting food prices (like in the 1990s, with the Archer-Daniel Midlands price-setting cases), as opposed to four foreign governments. It is harder to stop the governments, because they rarely respond to lawsuits — but the economic consequences, so long as the price-fixing conspiracy lasts, is no different.

A point made in the comments is also true – which is that telecom tends to be in the realm of state-supported or regulated monopoly, and so there is some confusion as to whether what we are talking about are really private actors in a pure sense. This is a point Hayek made quite well. If government helps create a monopoly, as it has in cable and telephone markets – then being concerned about the consequences of that monopoly makes much sense.

Finally, on Tim Lee’s post – I take much less issue. I’d just like to point out that I am also an advocate of greater propertization as well as more dedication to the commons—its the stuff in the middle I don’t care for. For example, as Tim knows, I would like to see the development of ways for people to own their own fiber connections (homes with Tails). I also believe that, in broad spectrum reform, there should be more propertization of the airwaves. The only silly position, it seems to me, is to maintain on principle that either a commons or private property is of no use whatsoever.